Trends & Insights

Originally published by Charlotte Business Journal A Charleston, West Virginia-based company recently acquired its second office building in Charlotte. RealCo purchased Live Oak, an 81,921-square-foot office building at 8701 Red Oak Blvd., for about $15.88 million on Dec. 16, according to Mecklenburg County real estate records. It bought the property from Tempus Realty. The five-story building, off West Arrowood Road and near Interstate 77, was 100% occupied at the time of the sale to tenants such as Beckhoff Automation, Accordius Health and Martineau King. Tempus Realty was represented by CBRE’s Patrick Gildea, Matt Smith and Grayson Hawkins. Katie Elliott of the Stan Johnson Co. and JLL’s Paul Hanna represented RealCo in the transaction. Tempus Realty purchased the property — built in 1989 — for $7.8 million in 2017. The building has since received HVAC upgrades, an elevator modernization and lobby renovations, totaling more than $1 million. “While scrutinized during the pandemic, suburban office tenants remain active from a leasing and capital markets standpoint,” Gildea said. He noted that "the airport submarket in particular is witnessing strong activity." RealCo first entered the market in 2010 with the acquisition of an office property at 13730 S. Point Blvd. The company paid $2.63 million for that 5.37-acre site, according to Mecklenburg County records. "Charlotte remains at the top of the list for out-of-market investors," Smith said. "The South End and CBD continue to grab the headlines, but new-to-market capital continues to invest in all areas of Charlotte."  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Westover Village located at 751 Alta Mere Drive in Fort Worth, Texas. The 7,500-square-foot unanchored shopping center was marketed on behalf of ownership by Anne Perrault of Stan Johnson Company. The center was acquired by a 1031 exchange buyer based out of Dallas, Texas. “We were able to secure multiple offers during our pre-marketing phase, ultimately signing up the deal at the anticipated full asking price,” said Perrault, Director in Stan Johnson Company’s Tulsa, Oklahoma headquarters. “This high-quality Target outparcel was a great fit for the selected buyer’s 1031 exchange.” Situated on 1.2 acres just eight miles from downtown Fort Worth, the strip center was constructed in 2021 and is fully leased to three tenants: Aspen Dental, Visionworks and Tropical Smoothie Cafe. All tenants operate on long-term net leases. The shopping center is an outparcel to a free-standing Target with other neighboring retailers including Burlington, Big Lots and ALDI, among others.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a quick service restaurant located at 2741 Southwest Military Drive in San Antonio, Texas. The 2,336-square-foot retail property is fully leased to Chipotle. Anne Perrault of Stan Johnson Company represented the seller, a Dallas, Texas-based developer. The 1031 exchange buyer was a private equity group located in Charlotte, North Carolina. “This particular asset was in a core, major Texas metro area, and with a long-term corporate Chipotle lease, the property received a lot of attention from the market,” said Perrault, Director in Stan Johnson Company’s Tulsa, Oklahoma headquarters. “We were very excited for the developer to close the deal at an outstanding cap rate.” The newly built property is located less than half a mile from San Antonio’s South Park Mall and other national retailers including Target, Academy Sports + Outdoors, Lowe’s, Sam’s Club, and many others. Situated on 1.23 acres, the site reflects the newest Chipotle prototype and features a “Chipotlane” drive-thru.

Originally published by GlobeSt With months of mandated closures, social distancing restrictions and tempered consumer demand, the retail market certainly took a hit during the pandemic. But not all retailers are exiting the pandemic for the worse. In fact, many are in expansion mode or already experiencing a swift rebound from the pandemic. Stan Johnson Co. recently published a Retail Tenant Expansion Report to outline the growth trends in the retail market. The report shows several retailers across sectors that are expanding their current footprint. “The automotive and convenience store sectors are reporting strong levels of planned expansion, with 7-Eleven looking to grow significantly in the long term, Quik Trip planning a significant regional expansion, and many of the aftermarket auto parts stores looking to add net new stores in the coming year,” Lanie Beck, director of corporate research, marketing and communications at Stan Johnson Co., tells GlobeSt.com. On the automotive side, Advance Auto Parts, Auto Zone and Jiffy Lube are in expansion mode, and they are catching investor interest as a result. For example, just a few days ago, Machine Investment Group closed on the acquisition of an 8-Property Jiffy Lube portfolio in the San Francisco Bay Area. The portfolio totals 38,360 square feet and it 100% occupied by Jiffy Lube International under triple-net leases. Retailer Sunbelt Rentals is another retailer that is in expansion mode. The company has 300 locations planned in the next three years. “This growth will lead to opportunities for investors chasing assets in the industrial outdoor storage sector,” says Beck. In addition, Beck notes that dollar stores and other discount retailers are also expanding. “Dollar stores and discount retailers are continuing to report high levels of planned growth, as are grocery stores, with the most robust growth coming from ALDI,” says Beck. “Many brands across the quick service restaurant sector are also growing fast, with several exploring new geographies and new store concepts.” While not all retailers got a pandemic push, some are making a rapid recovery. Fitness centers are at the top of that list, according to Beck, who says that gyms are making a comeback. “As people learn to navigate the post-pandemic environment, we’re seeing consumers return to experiential and non-essential retail stores in droves,” says Beck. “Major fitness chains including LA Fitness, Life Time and Planet Fitness are all reporting new store openings.” Banks are also recovering quickly, and many are starting to expand. “We’ll be keeping an eye on retail bank growth,” says Beck. “Bank of America and Chase Bank are two companies with aggressive growth plans, and we’ll see how these new developments translate to investor interest in the coming years.”  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a 170,000-square-foot, two-building industrial facility located at 5501 Fulton Industrial Boulevard in Atlanta, Georgia. Stan Johnson Company’s Robert Poirier represented the seller and tenant, Diaz Wholesale & Manufacturing, which executed a long-term triple net lease at the time of sale. The buyer, a New York-based institutional investor, acquired the asset for $16.0 million.  “The tenant was extremely interested in taking advantage of current market conditions,” said Poirier, Associate Director in Stan Johnson Company’s Atlanta, Georgia office. “Because of timing constraints, we conducted an off-market campaign, created a very competitive environment, and received offers from 8 of the 10 potential investors. The entire process took less than 60 days, and we were able to set a new record for price per square foot in Atlanta’s Fulton Industrial submarket on comparable buildings.” Founded in Atlanta in 1980, Diaz Foods is a leading distributor of specialty foods across 28 states, and this property serves as a mission-critical distribution facility. The two-building property is situated on 12.4 rail-served acres in one of the main industrial corridors of metro Atlanta with close proximity to Interstates 20, 75, 85 and 285. The cold storage and distribution site features freezer-cooler, refrigerated and dry storage, along with office space and a dedicated truck maintenance building. The facility was originally built in 1980 and was renovated in 2004.

Originally published by GlobeSt Thomas Park Investments and Chevy Chase, Md.-based private equity firm Artemis Real Estate Partners have formed a joint venture to acquire a $500 million portfolio of healthcare real estate. The programmatic venture will seek core plus medical office buildings throughout the mid-Atlantic and Northeast. The venture kicked off with the $40 million acquisition of medical office real estate across three buildings in Baltimore and Columbia, Md., and Princeton, NJ. Medical Office Buildings a Resilient Asset Class Christian Vaughan, Associate Director with Stan Johnson Company, tells GlobeSt.com that the medical office sector is seeing robust levels of activity with more and more buyers being drawn in by the allure of the resiliency of the asset class, as highlighted by the COVID-19 pandemic. “We continue to expect a high level of competition in the healthcare real estate market, with new healthcare buyers entering the market,” Vaughan said. “Groups that have historically been winning opportunities are now threatened by new funds willing to pay aggressive cap rates in today’s interest rate environment.” There is investor interest anywhere from core, A+ quality product to value-add assets, and all those in between, Vaughan said. Medtail’s Popularity Grows Medtail⁠—the hybrid concept where medical tenants are occupying retail space⁠—also continues to grow in popularity, as do veterinary practices, dental and urgent care chains, free-standing physicians’ offices and traditional multi-tenant medical office buildings, he said. “Aging populations and growing demographics are both driving the need for medical space, and we’re seeing new healthcare developments surging in tertiary and rural markets as these communities need better access to routine and emergency care,” Vaughan said. “Preliminary data suggests we’ll see overall healthcare investment sales top $14 billion for 2021, which would be the sector’s second strongest year on record. And the expectation is to see continued growth in the coming years.” A Reasonable Bridge From Office Alexander Snyder, Portfolio Manager at CenterSquare Investment Management, tells GlobeSt.com that medical office buildings had been gaining in popularity even prior to the pandemic, but the stability they provide became even more desired as the country rode the “volatility wave of global dislocation” that COVID-19 caused. “While regular office buildings emptied out and have largely stayed that way for going on two years, specialty office⁠—lab space and medical office⁠—has remained utilized by tenants and desired by investors,” Snyder said. “MOBs in particular are a reasonable bridge from traditional office, allowing both expertise and capital to flow from one into the other. The increased attention on MOBs and the increased desire for stable cash flows has naturally led to an increase in the prices these assets can command. “Beyond the steady nature of MOBs, they also benefit from the aging demographics of the United States. As Baby Boomers age they demand more medical care. Combine this with the general Sunbelt migration we’re seeing, and you can benefit from not one, but two demographic tailwinds by snagging MOBs in the Sunbelt.” CenterSquare has invested in Flagship Healthcare Trust, a private REIT investing in Sunbelt MOBs, for exactly this reason, Snyder said.  

The early education/childcare sector has been a staple for net lease investors. The market has a varied mix of large and independent operators, and the need for these essential facilities is truly nationwide, providing ample supply for buyers. As we emerge from the pandemic, market dynamics are shifting, and investors are revisiting this asset class in earnest. We caught up with Milo Spector to discuss trends and changes across the sector and his predictions for 2022. Lanie Beck: How is the early education/childcare sector recovering from the pandemic? Milo Spector: The early education/childcare sector is seeing a pretty strong recovery from 2020. In most cases, these facilities are seeing pre-COVID enrollment levels, or very close to it. In terms of transaction volume, we saw things start picking back up toward the end of 2020, and market conditions have been very strong throughout 2021. We did not see cap rates increase after things started to normalize, though. In fact, we started seeing more aggressive cap rates due to the increased demand in the net lease sector as a whole. I think folks are starting to understand that, despite the pandemic, this is truly an essential service. LB: How has the buyer pool diversified in recent years? MS: Historically, the buyers in this space have been predominantly institutional. However, we have seen a gradual shift over the years to more high-net-worth investors and private family offices. I expect we will continue to see this trend as investors are desperately seeking yield and exploring property types they didn’t consider before. The yield on these types of properties is still relatively high compared to other assets in the net lease space. LB: What are your predictions for supply, demand and pricing trends in 2022? MS: I think we will see a lot more supply going into 2022 as the gas is being pressed on expansion again for a lot of these companies. In terms of demand, I believe we will continue to see demand increase as more and more net lease investors see the value in this sector. This should continue to push cap rates down the same way we’ve seen across other net lease property types, like quick service restaurants and discount stores. LB: Where are the opportunities for investors in today’s market and beyond? MS: In my opinion, the opportunities lie in the small to mid-size operators. In some cases, you might be able to get a more advantageous cap rate for these properties, and since there is a lot of consolidation in the space, an investor might end up with a stronger credit during ownership. I believe that if an investor is comfortable owning a property with a small to mid-sized operator, they might end up hitting the lottery if the smaller brand gets acquired by one of the larger ones. hbspt.forms.create({ region: "na1", portalId: "7279330", formId: "a1753ac5-1f1b-46f5-b464-ee003cc35da1" });

Excerpt of article originally published by GlobeSt Deka Immobilien has acquired a single-tenant retail property in Santa Monica for $54.25 million from Tooley Interests LLC. The 29,064-square-foot property is fully occupied by a Whole Foods grocery story. Deka Immobilien acquired the property through its fund Deka-ImmobilienNordamerika, and the transaction is its second purchase on the West Coast. The sale is a quintessential example of the investor demand for retail product. Over the last two years—as a result of the ongoing pandemic—grocery stores are experiencing record sales. According to Driss Oualkadi, president Deka Immobilien in the USA, the trend is what attracted the company to this Whole Foods-occupied single-tenant property. “This asset’s established and necessity-based footprint, combined with a long-term lease in the heart of Santa Monica, is an ideal example of the opportunities we seek to acquire as we enter into 2022,” he said in a statement. There has been a boom in single-tenant net lease transactions across the country as a result. Per a report from November, single tenant net lease sales volume hit $20.7 billion, enjoying its sixth strongest quarter on record in Q3, with office clocking in at $7 billion (up 30% from last quarter), industrial hitting $10.7 billion (up 11% from last quarter), and retail posting $3.1 billion (down 31% from last quarter). In an interview at the time, Lanie Beck, Stan Johnson Company Director of Corporate Research, Marketing & Communications said, “early predictions put 2021’s estimated annual total around $75 billion, which would make it the second strong year in history.”