Stan Johnson Company is now Northmarq!

Northmarq investment sales broker Isaiah Harf completed the sale of a 4,403-square-foot retail condo on the ground floor of the Metropole Condominiums located at 1515 15th Street Northwest in Washington, D.C. The property is fully leased to TD Bank, one of the largest banks in the United States. Harf represented the seller, a private investor based in Maryland. The California-based 1031 exchange buyer acquired the asset for approximately $7.6 million.   “This was a very challenging environment to close this transaction in with rising interest rates daily,” said Harf. “In the end, the purchaser pushed through, and we closed in a timely manner.”  The property was built in 2008 and is situated in one of the fastest growing neighborhoods in downtown Washington, D.C., Logan Circle. The property boasts outstanding demographics with over 416,000 residents with an average household income of over $157,000 within a three-mile radius. Neighboring national retailers include Whole Foods Market, Chipotle, Wawa, CVS Pharmacy and more.

Northmarq investment sales broker Isaiah Harf completed the sale of a Whole Foods Market located at 6020 North Cicero Avenue in Chicago, Illinois. The 41,148-square-foot grocery store is situated on the first floor of a vertical condominium development. Harf represented the seller, a private investor based in Maryland. A family trust located in Denair, California acquired the asset for approximately $18.1 million.   “Despite the challenging headwinds of interest rates rising nearly 300 basis points during the transaction, this premier asset received multiple offers and went under contract quickly,” said Harf. “The purchaser is excited about their future long-term ownership of this property and its uniqueness in the immediate marketplace, offering full underground parking and being located directly off the expressway. Not only were the sales at this location above average, but Amazon/Whole Foods had already renewed once prior.”  The property was originally built in 2007 and is situated on a 1.85-acre lot. Located in the Sauganash neighborhood of Chicago’s northside, the high-end grocer benefits from 284,237 residents with an average household income of $99,533 within a three-mile radius. The retailer is less than 12 miles from downtown Chicago and sits at the signalized hard corner of West Peterson Avenue and Cicero Avenue, immediately east of the on and off ramps to Interstate 94.

Originally published by Wealth Management Retail brokers and consultants expect strong interest when Sears spinoff Seritage Growth Properties starts to liquidate the remainder of its assets, as recommended by its board of trustees. But these industry insiders expect discounts will be necessary in order to consummate transactions.  Shareholders recently approved a plan that will bring additional Seritage properties to the market during a time of rising interest rates and a slowdown in commercial real estate deals.  Despite that added challenge, Seritage assets are bound to garner a lot of investor interest, says Margaret Caldwell, investment sales broker at Northmarq, which provides capital markets services to commercial real estate investors. Many of these properties are located in prime markets, with strong population and income levels, she notes.  Typically, a Sears box attached to a regional mall includes the parking field surrounding it, which can add a significant number of acres to the property, making it all the more attractive to potential investors, according to Caldwell.  “There are lots of investors and developers that continue to look for opportunistic investments where they can create value,” Caldwell says. “Many of the Seritage properties provide exactly these types of opportunities—repositioning an asset, for example, through redeveloping these boxes into other uses, such as multifamily or exterior-loaded retail.”  Industrial and self-storage could also be among potential uses for those sites, according to other industry insiders.  The investor demand will be there as long as the pricing on the assets is in line with the market expectations for absorbing risk, backfilling vacancies and undertaking redevelopment, says Matt LoPiccolo, first vice president specializing in retail with Matthews Real Estate Investment Services. He expects that to be the case because Seritage has a loan payment due to Berkshire Hathaway.  “The demand is there, and it’s just a function of their expectation on the price and that’s why some of their deals have sat on the market for a while or fell out of contract,” LoPiccolo says. “[There’s interest] because you’re going to be well below replacement costs and land value. The opportunity creates value in terms of backfilling with better quality tenants or in-demand tenants. All of that just boils down to the time and cost to reposition or redevelop the site.”  The main challenge to completing sales of remaining Seritage assets will likely be what’s going on in the debt markets, says Daniel Taub, senior vice president and national director of retail with real estate services firm Marcus & Millichap. Some of the deals where there will be opportunity to create higher value are also going to be capital-intensive, and matching up those investment opportunities with the right capital—including both debt and equity—is likely to be more challenging due to the current instability in the capital markets, he says.  Neil Saunders, managing director at research firm GlobalData Retail, is a little more pessimistic. While there will be some demand for the assets, it won’t be as strong as it would have been a year ago, he notes. The market has turned downward, and people are more concerned about taking on debt to finance new transactions. Real estate values under more pressure as well, he adds.  “I think some of the yields people see coming from it are much weaker than they were last year and before the pandemic hit,” Saunders says. “There’s definitely something they can do in terms of a sale, but I don’t think they will get the maximum value out of these things. There are certain properties they will have to sell at a discount if they want to unload them.”  In the end, Saunders says, he sees the liquidation sales going through because Seritage must realize it could be more difficult to close deals in 2023 if rising interest rates and lower consumer sentiment further damages the economy.  “Maybe the thought process is to get rid of them now because they might get less in a year’s time,” he adds. “It’s not a great time to be selling, but the risk is if you leave it, it might be even worse.”  Pricing  Seritage properties will most likely be priced based on land values per acre in the local market or price-per-sq.-ft. for existing older buildings, according to Caldwell. Pricing would be maximized, however, if investors are provided the option to purchase these assets separately or in mini portfolios, she adds.  Caldwell doubts that the remaining assets can be easily sold as a portfolio other than at a discount, given the significant number of remaining properties and the diversity of locations included.  According to Taub, it’s hard to feel confident about prices and their impact on private and institutional investors at this time.  “Pricing seems to be the most difficult to get your hands around because of what it was 30, 60 or 90 days ago and what it is today, being materially impacted by what’s going on in the capital markets,” he says. “The market to varying degrees is impacting all asset classes in retail.”  Some of the assets, if there were stabilized and depending on their location, could have sold at cap rates in the high 5 or 6 percent over the summer. The ones offering more of a value-add approach or more of a redevelopment opportunity, could see cap rates reach the 7.5 to 8.5 percent range, Taub notes.  Potential buyers  The mix of interested buyers for Seritage properties could range from retailers to developers looking at the best possible uses, including multifamily, says LoPiccolo. Most former Sears and Kmart properties hold strategic locations and could also offer an opportunity to develop mixed-use projects, he notes.  Saunders expects potential buyers to include real estate developers, mall owners and private equity investors. That buyer pool is going to be a lot smaller than it would have been before the current economic environment set in, he notes.  “There would have been a whole suite of people interested, but now the prospective field is a bit thinner,” Saunders says. “I think you’re more likely to get some of those investment firms if they can see these as a long-term win for them. I don’t think you will get much interest from the retail community, quite honestly. There are buyers, but they are a bit more discerning, and you have to work hard to find them.”  Some buyers, however, will be attracted by the risk-adjusted returns and property locations, according to Taub.  “The real estate in many instances is fundamentally good real estate, including those in non-primary markets,” Taub says.  If the asset is attached to an enclosed mall, the mall owner may be the one to buy it because they could see it as a way to control their destiny and create additional value for their mall, Taub says.  In addition, the liquidation could open opportunities for investors who can complete all-cash transactions and wait out the current economic cycle, he says.  Where the assets are  During an initial offering, Seritage brought about 38 assets to market, and Taub says he’s awaiting an announcement for the next batch.  Seritage owns properties across the country, but primarily east of the Mississippi River, he notes. They are located along the East Coast from New Hampshire, New York, Delaware to Virginia, the Carolinas and Florida. There will also be opportunities in Ohio, Illinois and Wisconsin in the Midwest, Texas and Arizona in the Southwest, and California on the West Coast.  The properties vary tremendously, but the majority of the Seritage sites are in traditional suburban locations  “With some of them, [Seritage] had successfully executed on the majority, if not the entire business plan, on repurposing those spaces,” Taub says.   

Northmarq’s Jason Maier, previously of Stan Johnson Company, has completed the sale of a single-tenant triple net lease Walgreens located at 509 Collins Avenue in Miami Beach, Florida. The 22,857-square-foot freestanding property sold for $35.3 million reflecting a 4.59 percent cap rate. Maier represented the buyer, a New York-based private investor. The seller was an individual based in New York.  “We are pleased to have been able to acquire this trophy Miami Beach property on behalf of our client, given the long-term lease to Walgreens and the inherent quality, size and intrinsic value of the real estate,” said Maier. “We were very excited to complete this transaction for our client, a generational real estate family that is taking a long-term view and holding period.”  Located in the heart of South Beach, this two-story property is strategically positioned on the hard-signalized intersection of Collins Avenue and 5th Street. The single-tenant retail store was built in 1995 and is situated on a 0.35-acre corner lot. The unique property is just one block away from Ocean Drive and a world class beach and minutes from the newly renovated Miami Beach Convention Center, 4,000 high-luxury condos, and some of South Beach’s iconic resorts and hotels.  

Originally published by Pittsburgh Business Times SomeraRoad has sold off the real estate of one of the SouthSide Work's key hospitality anchors as it continues to reposition the next complex with its new "micro neighborhood" approach.  A new owner based in New York called Regal Ventures bought the Cheesecake Factory restaurant property at the heart of the SouthSide Works, paying $7.1 million for the property. The restaurant, known to draw more than one million diners a year, will continue to operate as normal, as it renewed to a new 15-year lease last year.  Ian Ross, founder and principal of SomeraRoad, announced the sale on his LinkedIn account, describing it as part of an ongoing component of executing its business plan.  The sale for a restaurant building that totals more than 12,500 square feet in size translates to a price of $565 a square foot, SomeraRoad announced.  The sale comes after SomeraRoad had bought the SouthSide Works as a distressed asset in the year before the pandemic, acquiring the nonperforming debt of the asset and then taking ownership with some significant redevelopment plans.  Now, the company is touting it was able to find at interested buyer for the property amid a challenging business environment as it works to invest elsewhere at SouthSide Works, with its $85 million apartment development The Park now under construction.  The New York-based investment sales broker who helped to bring the deal together, Asher Wenig, of New York-based Northmarq, noted a "major rejuvenation" of the SouthSide Works in a prepared statement and expects "this strong performing Cheesecake Factory will benefit from major growth in the area given the healthy term, rent and percentage rent outlined in the lease."  SomeraRoad has invested to redevelop the town square in front of the Cheesecake Factory, establishing three new food vendors there, as part of its bid to achieve a renewal with the restaurant, now selling off the restaurant asset as it works to improve the larger complex.  The sale of the Cheesecake Factory property is the second sale of a portion of the SouthSide Works by SomeraRoad, which also sold The Flats at SouthSide Works, anchored by a new Rite-Aid store at the corner of 27th Street and East Carson, in July.   

Northmarq investment sales broker Jason Maier completed the sale of a freestanding grocery store located at 105 Northwest Highway in Crystal Lake, Illinois. The 74,800 sq. ft. high-end supermarket is leased to Mariano’s, a wholly owned subsidiary of The Kroger Company. Maier represented the seller, a New York-based private investor. The property was acquired for approximately $34.7 million by a 1031 exchange buyer based in New York.  “We were very pleased to have represented both parties in this transaction. It was the perfect timing and the ideal property for a 1031 buyer that our team was exclusively representing,” said Maier. “One of the major benefits of our platform is the access we have to some of the best trophy triple net leased properties in the country.”   The property was built in 2018 as the most recent Mariano’s prototype format and is situated on an 8-acre lot at the signalized intersection of Northwest Highway and South Virginia Road. Just 45 minutes northwest of Chicago, Crystal Lake boasts strong demographics, and is home to approximately 131,187 residents within a 5-mile radius. The average household income is approximately $111,903 within a 3-mile radius.   The upscale grocery store offers a Starbucks, sushi bar, pizza oven, oyster bar and sweets shop. Neighboring businesses in the surrounding retail corridor include Target, Walgreens, Aldi’s, Sam’s Club and numerous quick service restaurants.   “It just worked out that we represented the current owner when he purchased the property as part of his 1031 in 2018,” Maier added. “It made perfect sense for the owner to sell, and it was the ideal trophy NNN leased asset our buyer was looking for. It checked all the boxes. It is always a great feeling to walk away knowing your clients are happy, and you were able to add real value.”