Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a childcare and education property located at 98 Yorktown Mall Road in Lombard, Illinois. The 16,216-square-foot early education property sold for $9.2 million. The property is currently leased to The Gardner School, an academically focused early childhood education center for ages six weeks to five years with locations across seven states. BJ Feller of Stan Johnson Company represented the buyer, a local private investor. The seller was a Tulsa, Oklahoma-based investor.  “This property represented an excellent chance for a long-standing repeat client of our team to add another well-positioned and strong performing childcare asset to their portfolio as part of their tax deferred exchange,” said Feller, Managing Director and Partner in Stan Johnson Company’s Chicago, Illinois office. “The Gardner School is one of the premier up-and-coming childcare operators across the United States, and this location in the western suburbs of Chicago is perfectly situated to thrive for years to come.”  The newly built school is situated on 1.43 acres in the quiet, family-friendly suburban community. The property is one of 11 locations in the Chicago area and is located near the Yorktown Center shopping district, convenient for families who live and work in DuPage County. The education center features spacious classrooms, indoor and outdoor play areas as well as significant security features. 

Originally published by GlobeSt Margaret Caldwell recently took three women on the cusp of their careers to dinner. One of the young women, fresh from graduation at UC Berkeley, asked Caldwell what the most important part of her career has been. Her answer?  “While I could talk about all of the successes and deals I’ve closed in the last 22 years – which total around $17 billion – the most important time in my career was the first five years,” notes Caldwell, managing director and partner at Stan Johnson Company in Atlanta who specializes in the sales of multi-tenant retail shopping centers. “That’s when I learned the skills I needed to be successful.”  Caldwell began her career as a financial analyst at Legg Mason in Washington, DC, before being recruited at age 25 to be a producer in the firm’s Charlotte office. She remembers being told on her first day that she’d be responsible for generating her own production with no support.  “I felt like I had been dropped in the deep end without water wings,” she says. But in hindsight, “this was one of the best learning experiences ever for someone with my personality. The word ‘no’ from potential clients made me work harder.”  The experience taught Caldwell to cold call, network and establish the foundational relationships that would be crucial to her later successes at firms like Binswanger, Cushman & Wakefield, JLL and now Stan Johnson Company, where she’s been for almost three years.  Caldwell acknowledges that “every day in this business is a challenge,” but says her ability to solve problems quickly and on her feet, coupled with strong math and writing skills, have helped her stand out.  “When I started in this business, for many years there were very few women,” she says. “I have enjoyed training other women on my team about the business, and now a good number of my clients are women. The numbers of women in commercial real estate are significantly increasing – and the proof was all of the successful women in the room in Deer Valley at the Women of Influence conference.”  Her advice for young professionals starting off on their commercial real estate career is direct and straightforward: build on your skills. And if you don’t have a skill, “you need to go get it or surround yourself with a good team,” she says, adding that ultimately, success comes from within.  “If I had to do it all over again, I would pick the same career path,” Caldwell says.  © 2022 ALM Global Properties, LLC. All rights reserved. 

Orginally published by GlobeSt The single-tenant net lease sector has passed its peak performance, based on Q2 data from Stan Johnson Company.  With rising interest rates and rampant inflation, net lease investors have been watching the market very closely, keeping note of cap rate compression, sales volume, and buyer demand.  “This could be the last quarter before we start to see a reversal of [the cap rate compression] trend,” according to Lanie Beck, Stan Johnson Company Director of Corporate Research, Marketing & Communications.  “Deals being priced today will influence closing cap rates reported for third quarter 2022 and beyond, so investors must keep in mind the lagging nature of this statistic.”  In the last three months, the overall average cap rate declined 10bps and has now been below the 6%-mark for a full 12 months, Beck noted.  Q2 activity marked a decline for a second straight period, falling 35% from Q1; YOY, volume is down 17% from Q2 2021, according to the report.  Construction Low Compared to Historical Norms  Doug Ressler, Yardi Matrix, tells GlobeSt.com, “The single-tenant net lease sector is well positioned for improving fundamentals this year as construction remains low versus historical norms and more companies evolve creative hybrid office plans. This scenario is resulting in quicker rent growth in trophy office properties to backfill spaces.”  Ressler said to look for investors to focus on tenants that demonstrated resilience during lockdowns, mixed-use and adaptive reuse and that REITs are also targeting assets with high credit grade tenants and longer lease terms.  Chris Maling, principal with Avison Young, tells GlobeSt.com that while sales in the QSR sector are down to comparative quarters, this is temporary due to inflation-related shock.   “Now that consumers are experiencing inflationary pressures, we will likely see more sales at QSRs due to price-point considerations in order to feed their families,” Maling said. “Many will forgo sit-down concepts and other higher price point options. Overall, the forecast is strong for increased sales and net revenue for Q3 and Q4 of 2022.”  © 2022 ALM Global Properties, LLC. All rights reserved. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the ground lease sale of a two-property portfolio in Durham, North Carolina. Located at 1510 and 1700 North Pointe Drive, the single-tenant retail properties are leased to Costco and Home Depot and total 148,660 square feet and 120,000 square feet, respectively. Jason Maier of Stan Johnson Company represented the buyer, a New York-based private investor, in the 1031 exchange. A developer based in Virginia sold the property for approximately $24.0 million.  “We felt this was an excellent long term hold for our client that will provide stability of income given the reliability of Home Depot and Costco in addition to long term appreciation,” said Maier, Director in Stan Johnson Company’s New York office. “Our client now controls 38 acres just 1.8 miles from Duke University’s main campus.”  Located in the North Durham submarket, the properties are two anchor tenants in the North Pointe Shopping Center. The power center serves a customer base of approximately 94,000 residents in a three-mile radius. Strategically located in a dense retail corridor with freeway visibility, neighboring tenants include Harris Teeter, PetSmart, Ross Dress for Less and many more national retailers.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Beal Commons, a multi-tenant shopping center located at 575 Beal Parkway Northwest in Fort Walton Beach, Florida. Beal Commons totals 15,982 square feet and is leased to strong national retailers. Stan Johnson Company’s Chase Dominguez represented the seller, a Fort Walton Beach, Florida-based developer. The property was acquired for $8.4 million by an individual investor out of Arizona. Both parties were involved in 1031 exchanges.  “Situated within a growing Florida market, strong credit and a diversified tenant mix made this center a highly appealing opportunity,” said Dominguez, Associate in Stan Johnson Company’s Atlanta, Georgia office. “Timely tenant renewals coupled with the fierce appetite of investors for multi-tenant retail this year has provided us with an ideal scenario to get this deal sold.”  The shopping center was built in 2006 and renovated in 2019. Tenants include Starbucks, FedEx Office, Verizon and Ruby Tuesday. Situated on 3.04 acres, Beal Commons has the best commercial corner in Fort Walton with great visibility and access at the intersection of Beal Parkway and Mary Esther Cut Off. The site benefits from a dense residential population, as well as significant tourist traffic. Nearby national tenants including Publix, Walmart, Chick-fil-A, Lowe’s, T.J. Maxx and more. 

Orginally published by Commercial Property Executive Based on its second-quarter performance, the single-tenant net lease sector is likely somewhat past its peak for this market cycle, according to a second-quarter market snapshot from Stan Johnson Co. But the true picture will probably not be revealed for another quarter or two.  Lanie Beck, SJC’s director of corporate research, marketing and communications, writes: “It’s almost certain that we’ll look back and identify fourth quarter 2021 as the true peak of this cycle.”  Similarly, despite a consensus among economists that we’re in a “technical recession,” it’s likely to be a while, perhaps year-end, before a true recession is identified, if at all, the report says.  In the meantime, after a spectacular fourth quarter of 2021, which brought end-of-year sales volume in the net lease sector to more than $103 billion, the first half of this year has seen sales volume closer to normal or average levels. “We’re likely to see more of that in the foreseeable future, pending a major market event,” Beck commented.  During the fourth quarter of 2021, single-tenant net lease sales activity topped $40 billion. The first two quarters of this year saw successive declines in sales activity to just $15.8 billion in the second quarter. Still, that figure would have been unremarkable for most of the previous 10 years.  A closer look  Specifically on the office side, second-quarter sales volume was $3.8 billion, down 53 percent from the previous quarter and down 21 percent year-over-year. Industrial volume was $8.4 billion, down 32 percent from the first quarter and down 14 percent year-over-year.  If the overall single-tenant net lease sector remains at its current pace, it should tally about $80 billion in sales for the year, which would approximately equal 2019, the second-strongest year on record. But if volume levels decline further, “the market will fall short of this target but will still have a comparatively strong year,” Beck wrote.  Cap rates in the single-tenant net lease market have compressed by 42 basis points year-over-year, falling from an average of 6.08 percent to 5.66 percent at midyear 2022.  On the office side, the single-tenant net lease investor pool has remained largely stable in its makeup. Among office buyers, private and institutional investors (each at 36 percent) are the dominant players, with REITs and foreign buyers representing only a combined 9 percent among them.  For industrial, however, institutional investors surged past REITs (now 24 percent) to take the lead at 33 percent of market share. Private buyers were responsible for 31 percent of acquisition volume, and international investors accounted for 10 percent of dollar volume in industrial, their preferred asset type, compared to office and retail. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, announced today that Sam Crowe has joined the firm as an Associate Director and will lead the company’s newest regional office in Denver, Colorado. Mr. Crowe specializes in the acquisition and disposition of multi-tenant and single-tenant net lease investment assets throughout the mountain states region.   “I am thrilled to join such a strong national platform,” said Crowe. “The powerful broker partnerships and the best-in-class resources will allow me to deliver the highest level of service for my clients.”  Mr. Crowe previously worked with Avison Young as a Senior Associate in the Denver market for six years. Prior to Avison Young, he was a Junior Associate at Katz Properties Retail in New York City. Before joining the commercial real estate industry, Mr. Crowe spent nine years in modular construction in the development of multifamily and single-family homes.  With the opening of the Denver office, Stan Johnson Company operates 15 regional offices in addition to the Tulsa, Oklahoma headquarters. This is the company’s sixth West Coast office.  “We’re excited to be opening the Denver office with Sam Crowe,” said Curtis Hodges, Senior Vice President. “Sam is a great addition to our firm and aligns perfectly with the values of Stan Johnson Company. He is an advisor to his clients and has an excellent track record in the mountain states. We’re looking forward to Sam providing value to his clients with our platform and team behind him.” 

  Market data, charts & graphs: current and historical trends for single-tenant office, industrial and retail properties, as well as multi-tenant retail Overall market trends Market summary & analysis Economic data points To download a copy of this report, please provide the following information: hbspt.forms.create({ region: "na1", portalId: "7279330", formId: "9f7b0d5c-8cd8-4faa-893e-d67639cf1ee0" });   On the s-curve that is the cyclical commercial real estate market, second quarter 2022’s performance suggests that we’ve passed the peak of the market, especially within the single-tenant net lease sector. With rising interest rates and rampant inflation, net lease investors have been watching the market very closely, keeping note of the following measures. First, cap rates continue to compress, but this could be the last quarter before we start to see a reversal of that trend. Deals being priced today will influence closing cap rates reported for third quarter 2022 and beyond, so investors must keep in mind the lagging nature of this statistic. Next, sales volume is another important indicator of where we are in the market cycle. It’s almost certain that we’ll look back and identify fourth quarter 2021 as the true peak of this cycle. Sales totals across the net lease market were astonishingly high, surpassing $103 billion. Within the individual property sectors, the end of last year saw activity, especially for industrial and retail, reach levels that seem nearly impossible to achieve again. While every record-setting quarter makes us question its repeatability, sales volume during the first half of 2022 was closer to normal or average levels, and we’re likely to see more of that in the foreseeable future, pending a major market event. Despite what might feel like a slow-down in market momentum, buyer demand is still incredibly high. Investors are actively seeking high quality and value-add deals, understanding that even though interest rates are rising, debt is still comparatively inexpensive. This will continue to create opportunities for investors, and there is still time for sellers to take advantage. It’s important to note that even once the market has passed its peak, we are still in positive territory. It remains to be seen how long we’ll stay here, but for now, there’s still a lot to be encouraged about. Yes, the U.S. economy has contracted for two consecutive quarters and consumer confidence has declined sharply in recent months. But on the other hand, unemployment is incredibly low and consumer spending remains high – two very important indicators of economic health. Opportunities abound across the commercial real estate industry, and investors should be able to continue transacting with confidence in the coming months and quarters despite the beginnings of a shifting market.  

Originally published by GlobeSt After performing admirably in Q1, real estate’s inflation-hedging abilities are being put to the test, according to a new report from LaSalle about what will impact commercial real estate in the second half of the year.   “It would be reckless to conclude that real estate will emerge unscathed from capital market chaos or a slowdown in national economies,” LaSalle wrote.  Falling stock and bond indices will likely lead to less liquidity for all forms of private equity, including real estate, and private real estate’s performance tends to lag equities and public bonds, it wrote.  In addition, it seems likely that both core and non-core strategies will face headwinds and tailwinds in the second half of the year, LaSalle also said.   The less accommodative interest rate environment is a challenge to core investors and an exposure to higher construction costs (materials and labor) “will play a part in determining how exposed various sectors and investment styles are to the higher rate and inflation environment,” LaSalle expressed.  “Given all the liquidity still in the system, it is hard’ to see distress manifesting until later in the cycle. Rather than tilting between risk profiles, more important considerations are underwriting and mitigating the relevant risks to each investment style.”  ‘Reckless is a Dramatic Word’  So says Jeff Cox, managing partner, Stan Johnson Company, who tells GlobeSt.com that “history tells us that real estate performance will be impacted by capital market changes or economic variability.   “But not all capital market or economic changes are alike. Further, not all real estate product types act uniformly to such changes. For example, notwithstanding recent Fed interest rate increases, we remain in a strong job growth market. U.S. jobless claims are the lowest they have been since 1969.   “Additionally, global equity markets gained positive ground in July. So, there are conflicting economic vitality statistics even within our current market conditions. In the net lease sector, we are maintaining a healthy pace of listings and closings, indicating an ongoing demand for net lease product and the stable returns it generates.”  Cox said that real estate, particularly net lease real estate, “has proved very durable during times of market variability. Historically, it has long served as an inflationary hedge. And during times of economic uncertainty, we consistently witness a flight to quality.”  Miranda Dean, senior Associate at Archer.re, tells GlobeSt.com that one way investors navigate the higher inflation and interest rate environment is to shift more of their capital allocation into CRE debt.  “Well-structured debt can give investors greater protection over the principal balance, a long-term inflation hedge, and avoid the potential of negative yields,” Dean said. “Diversification is critical during market uncertainty, and debt can provide greater exposure to a variety of tenants, sectors, geographies, and borrowers, all of which help mitigate risk and support a more balanced income stream.”  RE Not Always the Inflation Hedge  Charles Krawitz, Alliant Credit Union senior vice president, chief capital markets officer and head of commercial lending, tells GlobeSt.com, “Real estate investments may not always serve as the inflation hedge that many are counting on. The stress and strain that consumers are feeling as a result of inflation will, in due time, manifest itself in diminished rents across multiple property types.   “As evidenced by declining savings, higher credit card balances and an uptick in personal term loans, consumers, particularly those making less than $80,000 annually, will be hard pressed to afford increased apartment rents, or be in a position to buy elective merchandise.   “While wages have increased, the impact of inflation on consumer spending is real and there are knock-on effects relating to the demand for industrial space, the viability of retailers, and ultimately the value of the associated real estate.  “Furthermore, raising interest rates have caused borrowing costs to increase and reduced the cash flow potential of underlying properties. The market is currently sorting out the related value consequences associated with these changed prospects.”  ‘Cloudy’ Outlook from Yardi Matrix  Paul Fiorilla, Director of Research, Yardi Matrix, wrote last month that the second half of 2022 presents unique challenges given how rapidly conditions are changing as volatility in the 10-year Treasury yield is likely to persist and that “every piece of news is a mixed blessing.”  Good economic news increases the cost of financing real estate while bad economic news provides relief for rates but deteriorates NOI forecasts, Fiorilla said.   “Growth is sure to slow as the pandemic stimulus windfalls shrink and higher prices erode consumer purchasing power,” according to Fiorilla. “The full extent of the deceleration – whether and when it leads to a recession, and how deep the recession extends – is very much in doubt.   “The impact on debt markets depends to a great deal on how the economy performs in coming quarters and whether the Fed successfully manages to slow inflation without creating a sharp recession. However it plays out, clearly the landscape is growing more difficult for the industry compared to the consistent growth of the last decade.”  Investing Requires a Nuanced Approach  Kevin Fagen, senior director—head of CRE economic analysis, Moody’s, wrote earlier this year, at the start of when the Federal Reserve began raising rates, that those seeking shelter in CRE must take a nuanced approach.   “CRE does have many characteristics that offer strong protection – or even outsized gains – during unexpectedly high inflation, but CRE is very diverse,” Fagan said. “In times like these, investors, particularly on the debt side, must adhere to another, even older adage: caveat emptor.”  Four things Fagan said to consider while investing in CRE in times of high inflation are property demand, price, hold period, and capital stack.  With demand, he said that “not all that glitters is gold. Are you investing in an asset or CRE segment with enough demand to push net property revenue in-line with inflation? Is inflation expected to be driven by macroeconomic demand, or mostly some exogenous or structural constraint on the markets?”  With pricing, he said having no breathing room can choke tightly priced assets. “Is there any cushion in the risk premium of your cap rate or loan coupons to absorb a sustained rise in interest rates? When a much greater value decline is implied for every basis point of cap rate rise for the very low cap rate properties, can you get the higher rent growth needed to maintain your property’s market value?”  Patience is a virtue as applied to the hold period, he said. “Can you carry the asset for an unexpectedly longer hold period to ride out the downward pressure of rising rates? Will a reactionary rise in rates occur gradually enough that revenues can quell the impact to values?  Finally, catch the upside if you can when it comes to the capital stack, he advised. “Are you in a debt position that benefits little from rent growth, while also being exposed to greater maturity default risk, lower recovery rates given default, and lower future value of your principal? Or, are you in an equity position with IRRs bolstered by rent inflation, even if exit values are lower on higher cap rates?”  Changing Markets Lead to Opportunity   Cox said that what has played out historically is that changing market dynamics lead to opportunity.   “Profit-taking opportunities are still available to well-informed buyers and sellers due to the liquidity remaining in the system and pent-up demand created during the pandemic,” Cox said.  © 2022 ALM Global Properties, LLC. All rights reserved.   

Originally published by GlobeSt Restaurant visits in the second quarter were down year over year as inflation and rising prices saw consumers cut back on spending.  Physical and online traffic to restaurants slumped by 2% over a year ago and remain 6% below pre-pandemic levels in Q2 2019, according to data from The NPD Group. Consumer restaurant spending increased 2% year over year and by 3% over pre-pandemic Q2 2019 levels, reflecting increased costs to restaurant-goers.  In addition, visits to quick service restaurants, which represent 82% of total restaurant traffic, declined by 2% year over year and are 3% below pre-pandemic levels for the same period in 2019. Data from Placer.ai underscores the current reality for QSRs as inflation tempers spending: while year-over-year visits to burger leaders like McDonald’s, Wendy’s, and Burger King are up, for example, year-over-three-year visits are down. Meanwhile, smaller regional burger chains are posting impressive numbers. Monthly Yo3Y visits to In-N-Out Burger, Whataburger, SONIC Drive-In, and White Castle in May 2022 grew by 38.5%, 14.0%, 20.8%, and 8.5%, respectively.  “This may indicate that the burger leaders’ subdued foot traffic numbers do not necessarily reflect a waning demand for QSR,” said Placer.ai’s Shira Petrack. “Rather, as more and more people look to reign in unnecessary spending, consumers may be limiting their overall spending and this category is able to take advantage of a wider percentage of overall QSR visits.”  Investor demand has nonetheless remained strong for net-lease and QSRs despite waning traffic, however. According to Lanie Beck, Director of Corporate Research, Marketing & Communications, Stan Johnson Company, tenants are actively expanding in the space, with Sonic leading the way. Beck says the chain plans to open 1,000 new locations over the next 10 years, while other established brands, including Chipotle, Jack In The Box, Starbucks and Taco Bell, have similarly communicated plans to open new locations by the hundreds.  Full-service restaurant visits, which account for 18% of restaurant visits, were down 3% year over year and by 20% compared to the second quarter of 2019.  “Consumers continue to deal with rising inflation and higher prices. We see three ways consumers respond to higher menu prices. They trade down to lower-priced items, cut back on the number of items ordered, or reduce restaurant visits altogether,” said David Portalatin, NPD Food Industry Advisor and author of Eating Patterns in America. “Operators and manufacturers can win in this environment by differentiating value, understanding that value doesn’t always translate to the lowest price. Quality and value become a critical differentiator when consumers spend on a restaurant meal during these challenging times.”  © 2022 ALM Global Properties, LLC. All rights reserved.   

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale leaseback of a five-location portfolio occupied by Little Caesars. The single-tenant retail properties are located across Nebraska and North Carolina. Matt Lipson and Chris Lomuto of Stan Johnson Company represented the seller, a California-based franchisee. The assets traded for approximately $5.7 million to a REIT based in Florida.  “This transaction was a perfect example of how a franchisee can leverage real estate to complete an acquisition. The incoming franchisee was acquiring these fee properties, along with a portfolio of leased properties from an existing Little Caesars franchisee,” said Lipson, Associate Director in Stan Johnson Company’s Portland, Oregon office. “We were able to structure a sale leaseback on the five fee properties at attractive terms to both real estate buyer and franchisee, that closed concurrently with their business acquisition. Post-transaction, the franchisee now has a sizable entity, with attractive leases throughout, and no pesky loan contingencies.”  Little Caesars is the third largest pizza chain in the world with more than 4,000 locations in the United States. The combined properties total more than 15,000 square feet and are located in smaller, tertiary markets.  “This is an exciting time at Little Caesars. Unit count is growing, the network is growing, strategic advantages are being realized, and it seems like this is really just the beginning for them,” said Lomuto, Associate Director in Stan Johnson Company’s Walnut Creek, California office. “We’re excited to be part of that effort and couldn’t be happier to help our franchisee client continue to grow their business with the acquisition of these locations.”   

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a multi-tenant retail portfolio in Jonesboro, Georgia. This portfolio includes the Shops of Tara and a Starbucks and AT&T outparcel located at 6620 and 6564 Tara Boulevard. Leased to 20 tenants, the Shops of Tara totals 69,868 square feet, in addition to the 4,164-square-foot Starbucks and AT&T outparcel. Stan Johnson Company’s Jeff Enck represented the seller, a private fund out of Australia. The properties were acquired for $9.3 million by a Georgia-based investor group.  “The property garnered exceptional interest as the Starbucks and AT&T outparcel was included in an otherwise non-credit shopping center. We were able to procure sixteen offers on the property both locally and across the country,” said Enck, Associate Director in Stan Johnson Company’s Atlanta, Georgia office. “The multi-tenant retail sector continues to show modest strength as investors look to hedge against the sharp rise in inflation. We are starting to see signs of caution; however, the 1031 buyers are continuing to hold up pricing for the moment.”  The strip center was built in 1984 and refurbished in 2019. Located in the primary Atlanta market, Shops of Tara is leased to a diverse mix of local tenants. The site benefits from a dense surrounding population of more than 198,000 residents within a five-mile radius. The property offers low rents as well as annual increases.