San Jose retail center deal signals interest in South Bay

SAN JOSE — Bernal Plaza, a San Jose shopping center featuring stores such as Staples and Ross, has been bought by a Southern California investor in what experts say signals robust interest in South Bay retail sites.

Bison Partners paid $38.3 million for the retail hub, according to documents filed on Sept. 5 with the Santa Clara County Recorder’s Office. The Lucky Stores supermarket site, owned by Lucky, wasn’t part of the property purchase.

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“This shows there is still a lot of strength in retail in the South Bay,” said David Taxin, a partner with Meacham Oppenheimer, a commercial real estate firm that arranged the property deal. “This shopping center has always done very well.”

Trusts headed up by the Facchino and LaBarbera families of San Jose sold the shopping center, county and state public documents show.

“It was just kind of time to sell the center,” said Bobby Facchino, a broker with Meacham Oppenheimer. “It is bittersweet.”

The Facchino and LaBarbera groups had owned the center since 1999, he added.

Bernal Plaza’s shopper demographics include a relatively high average income level of $191,500 within a 5-mile radius of the center, according to Meacham Oppenheimer. The Santa Clara County area median income is $195,200. The numbers are based on a four-person household.

“Bernal Plaza hasn’t lost any major tenants since COVID, which really speaks to the strength of the center,” Taxin said.

One of the primary empty spaces in the center was vacated by Chase Bank. The new ownership group is seeking an unidentified food use for the site, Taxin said. A hardware store is eyeing another space in the center, according to Taxin.

The deal was completed at a time when the overall retail market in the South Bay was showing signs of weakness due to the departure of some big-box stores.

Retail vacancy levels were higher and asking rents were lower in Silicon Valley during the April-through-June second quarter compared with the January-through-March first quarter, Cushman & Wakefield, a commercial real estate firm, stated in its latest report on the area’s retail sector.

According to the report, the South Bay had a retail vacancy rate of 5.2% in the second quarter, up from 4.7% in the first – a six-year low for that benchmark.

Monthly retail rents in the South Bay averaged roughly $2.81 a square foot a month during the second quarter, below the first quarter monthly asking rent of $2.92 a month, the Cushman & Wakefield report determined.

Despite some economic uncertainties, investors are showing long-term confidence in the South Bay retail market.

That appears to be the case with the recent purchase of Bernal Plaza, according to Taxin.

“The deal shows investors still believe in Silicon Valley,” Taxin said.