Trends & Insights

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Kimmell Crossing, a 44,962-square-foot shopping center located at 636-648 Kimmell Road in Vincennes, Indiana. Shadow-anchored by Walmart, the center was fully leased at the time of sale to 10 tenants. Stan Johnson Company’s Ryan Roedersheimer represented the seller, Regency Properties, a developer based in Indiana. A North Carolina-based private buyer, DPPM Management, acquired the asset for approximately $4.6 million. Both parties were involved in 1031 exchanges.  “Once again, we were able to help all sides achieve their goals,” said Roedersheimer, Director in Stan Johnson Company’s Cincinnati, Ohio office. “The seller had a capital call deadline and use for the proceeds, while the purchaser wanted to expand his portfolio with a stabilized asset that provided a little more yield to it.”  The property is situated on 4.24 acres off the exit ramp of U.S. Highway 41 and boasts excellent visibility and access via multiple points of ingress/egress, including a signalized intersection. Tenants include Dollar Tree, Maurices, T-Mobile, CATO and other national retailers.  “Not only did both sides achieve their goals, but the seller is now managing the property for the out-of-state buyer,” Roedersheimer added. “They have developed a great relationship throughout this process. As is true with each project I oversee, it is always the hope that parties come together in a healthy and meaningful way. That’s exactly what we accomplished with this transaction.” 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a multi-tenant strip center located at 160 West Town Square Way in Oak Creek, Wisconsin. The Shoppes at Drexel totals 10,351 square feet and is fully leased to five tenants. Stan Johnson Company’s Ronnie Givargis represented the seller, a New York-based individual investor. The property was acquired for $5.9 million by an investor group out of Cedar Rapids, Iowa. Both parties were involved in 1031 exchanges.  “At 5.94 percent, this was one of the lowest cap rates for a strip center in Wisconsin,” said Givargis, Senior Director in Stan Johnson Company’s Newport Beach, California office. “Through our targeted marketing efforts, we generated multiple offers and ultimately selected a buyer familiar with the local area.”  The strip center was built in 2017 and is situated on 1.45 acres in a southern suburb of Milwaukee. Tenants include Mod Pizza, Men’s Hair House, Five Guys, Crumbl Cookies and Potbelly. The property is an outparcel to Drexel Town Square, the city’s premier mixed-use development comprised of 85 acres of retail, medical, residential and government operations. The site benefits from a dense surrounding population of more than 140,000 residents earning an average annual household income exceeding $83,000 within a five-mile radius. 

Originally published by GlobeSt The Great Recession, the e-commerce revolution and a global pandemic constituted an unprecedented 1-2-3 punch for retail. The good news is that the much-beleaguered commercial real estate sector has bounced back, and investors are taking notice. That’s according to Margaret Caldwell, Stan Johnson Company’s managing director & partner, and Jeff Cox, managing partner of the CRE brokerage and advisory firm and sales leader of the east region, who note the outlook, especially for multi-tenant retail’s evolution, is looking up.  “The top trend is that in 2021 retail took off again,” said Caldwell. “Prior to and during COVID-19, retail had been quite challenged. We were seeing only a handful of bidders show up for an asset, but now there’s a significant number of investors bidding on retail properties. Additionally, pricing has returned to levels last seen in 2007, and in some cases, cap rates have been even lower than that last benchmark.”  New investors are entering the retail market, perhaps rolling out of the multifamily or industrial sectors in pursuit of more opportunity. And institutional investors, including REITs, are active again. Caldwell reports that “huge volumes of capital are being raised and deployed for multi-tenant retail product.”  “After what could probably be described as a deep chilling effect during the pandemic, we’re experiencing significantly more leasing and investment sales activity,” Cox added. “Rents are also increasing as vacancies are being absorbed with little to no retail development.”  The retail sector, and specifically multi-tenant open air shopping centers, have come a long way since the Great Recession, after which “malls started to slowly fall out of favor,” according to Caldwell. Grocery anchored open-air properties have remained the bright spot in the post-downturn days.  “Following the Great Recession, e-commerce was very much still in its infancy,” Cox said. “And we’ve all seen that its impact on the sector was significant in terms of shopping patterns, preferences and logistics.”  Retail started to improve around 2011-2012, once challenged assets were sold off, and then settled into a new groove a couple of years later until 2020 when COVID-19 hit. After several quarters of lackluster investment activity during the height of the pandemic, multi-tenant retail has come back to life, and “there’s been a ton of growth in store sales,” said Caldwell. “We’ve seen some centers where 2021 sales increased 20% to 30% on average – this is because consumers want to shop in stores.”  COVID-19 provided shoppers the perfect excuse to buy a significant number of items online, but post-pandemic, that reliance is waning. “We are beginning to see online sales stabilize and, in some cases, decline,” agreed Cox. “This has ultimately resulted in investors understanding the resilience of brick-and-mortar retail.”  Cox added, “moving out of the pandemic, we’ve been encouraged that in-store shopping has rebounded. A lot of this can be attributed to the fact that retailers continue to evolve, attracting shoppers to new and different shopping venues and experiences.”  The outlook of multi-tenant retail is bright with more and more capital getting into the investment game. Retailers are continuing to be innovative, and they’re looking for ways to incorporate experiential elements into their formats. In today’s post-pandemic environment, amenities and experiences are important to consumers, and today’s expectations will help shape the future of retail. 

We are honored to be named as a Retail Influencer by industry news leader, GlobeSt.com! We are committed to serving clients with all their single- and multi-tenant retail needs for investment sales, corporate solutions and financing.  Retail Influencers 2022 Excerpt of article originally published by GlobeSt Without a doubt, the retail sector has seen some dark days especially since the start of the pandemic, when predictions called for a recovery period that would take years. But, much like hotels which were supposedly on a similar grim path, the retail sector has rebounded nicely, even with Covid-19 still part of our lives. Shoppers have returned to the stores, e-commerce is taking less of a bite out of total retail sales and it is forecast that this year there will be more store openings than closures. In the following pages, we acknowledge the men and women who successfully navigated these changes and made a meaningful impact on the sector in the last year.  STAN JOHNSON CO. With a historic focus in the single-tenant net lease sector, Stan Johnson Co. is now in its fourth decade of operation and has expanded its service platform. The firm has completed more than $40 billion in transactions nationwide and continues to be regarded as an authority in the net lease space, while it broadens its focus into other sectors and services. The commercial real estate brokerage and advisory firm, led by president and CEO Stan Johnson, focuses on investment sales transactions involving retail, office, industrial, health care and specialty properties and it provides acquisition, disposition, sale-leaseback, capital markets and advisory services for institutions, developers, investment funds, corporate occupiers and private investors nationally. The firm’s expertise includes single-asset and portfolio sales, as well as sale-leaseback transactions and 1031 exchanges that span all types of retail assets including single-tenant net lease, unanchored strip centers, neighborhood and power centers and more. Throughout its existence, Stan Johnson Co. has closed more than 5,000 retail transactions totaling more than $23 billion in sales activity. In the past three years, the firm notably closed a net lease CVS Pharmacy in Puerto Rico, a $68.4 million retail portfolio of 27 properties, a 10-unit quick service restaurant portfolio sale for $13.7 million, a Burlington-anchored community center in Virginia for $11.1 million, and a convenience store sale-leaseback for $9.4 million. In 2020, the company announced the firm’s first acquisition, as Atlanta, Georgia-based Shane Investment Property Group joined Stan Johnson Co. to further support its growth in the multi-tenant retail sector.   

Excerpt of article originally published by GlobeSt Capital poured into the booming single-tenant net lease sector in the first quarter, with sales volume up 30% year-over-year.   According to recent research from Stan Johnson Company, the STNL market reported activity at around $21.7 billion. Over the last three months, the sector saw “negligible” movement in the overall cap rate, which moved down 3 bps to 5.84%.  “Following a record-setting 2021 with unprecedented levels of investment sales activity in the final quarter of the year, there was no expectation that the single-tenant net lease market was positioned for back-to-back quarters of such volume,” Stan Johnson Company analysts note in a report on the Q1 data. “Instead, predictions called for just enough carried momentum to position the market well enough to have a respectable follow-up year. Despite current headwinds—with inflation raging and interest rates rising—the market delivered on those predictions for the most part.”  The firm says “it is highly unlikely and perhaps even impossible” that this year will see activity surpassing 2021 levels, but “we had a healthy start.”   The industrial sector drove most investment activity and accounted for more than half of the quarter’s overall total.  Office also logged $6.9 billion in total, thanks largely to Google’s purchase of a single-asset Manhattan office building last year.  “Even without the Google transaction, the single-tenant office sector would have come close to meeting its historic average, indicating investor confidence has rebounded from the height of the pandemic when the future of office use was much more uncertain,” the report states.  Single-tenant retail had the most significant decline quarter, down 66% from Q4 numbers but more in line with demand levels Stan Johnson Company analysts say they’ve seen in recent years. Meanwhile, multi-tenant retail logged $14 billion in sales in the first quarter amid rising investor demand.  Private investors led activity and accounted for 36% of the buyer pool, followed by US-based institutional investors and REITs, at 25% and 23% respectively. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of The Bakerie, a cannabis dispensary located at 1836 Harbor Avenue in Long Beach, California. The 8,288-square-foot retail property sold for $11.0 million. Christian Tremblay and Isaiah Harf of Stan Johnson Company represented the seller, a Michigan-based private investor. Edwin Mariscal of CRE Advisory Group represented the buyer, a foreign investor who resides part time in California.  “This is the largest recorded retail dispensary sale in the state of California, and we are honored to have assisted our client in getting this property sold,” said Tremblay, Associate Director in Stan Johnson Company’s Chicago, Illinois office. “We have seen an increase in demand for cannabis assets due to their attractive yields in the current net lease environment and their high sales on a per square foot basis. Additionally, with the potential of safe banking and lending options continuing to evolve, we anticipate this demand to continue.”  Situated on 0.74 acres, the property is located at the signalized intersection of Harbor Avenue and Pacific Coast Highway near the on/off ramp of Interstate 710, which provides the site with incredible visibility. The Bakerie is a premium California-based cannabis brand that launched in 2020 by a group of industry veterans, and the tenant operates on a long-term net lease with rare annual rent increases. The property is co-branded with Lemonnade, the sister company of Cookies, which is one of the top cannabis brands in the world. The well-located site is just 22 miles south of downtown Los Angeles, 19 miles from LAX and six miles from the Port of Los Angeles. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a net lease early childhood education facility in the Southwest region of the U.S. The 20,600-square-foot property is fully leased to Guidepost Montessori, the nation’s largest network of Montessori schools. Milo Spector of Stan Johnson Company represented the seller, a Florida-based individual investor. The asset was purchased by a private 1031 exchange buyer from California. The property sold for approximately $10.8 million reflecting a 5.75 percent cap rate. The sale set a new nationwide cap rate record for the tenant.  “This transaction illustrates the growing interest in the early education space,” said Spector, Director in Stan Johnson Company’s Walnut Creek, California office. “We were able to source multiple offers both nationally and locally and sell the property for 100 percent of asking price to an all-cash buyer. Properties that were trading in the 7.0 percent cap rate range just a couple years ago are now trading in the 6.0’s and pushing more and more towards the 5.0 percent range. I expect this to continue as more folks search for yield on other net lease properties and struggle to find it.”  The school is situated on 4.0 acres in an upscale master-planned suburban community. The local area features outstanding demographics with projected annual population growth of 2.90 percent in a three-mile radius. Originally built in 1996, the property was renovated in 2021. 

Originally published by GlobeSt Despite declines in most Q1 YoY restaurant metrics in 2022, investor demand for net-lease and quick-service restaurants has been generally strong post-pandemic.   Mike McKean, founder of Retailsphere, tells GlobeSt.com that Q1 2022 is the first look at how the restaurant industry may fare in a post-pandemic world.  “With companies going to a more remote model, many office spaces now sit vacant that once helped bolster breakfast and lunch visits. And while in-person dining is increasing, it is likely this will impact the QSR segment, because consumers aren’t looking for new to-go options right now.”  There also has been a shift in driving habits where many people drive less in general, a trend “that has become especially true when you layer in the increasing gas prices,” McKean said. “When you combine all of these factors, dining out overall is likely to take a hit.”  Fast Food, Fast Casual Remain Popular  Tell that to some of the QSRs. There is plenty of evidence that brands are forging ahead despite NPD Group findings that online and physical visits to QSRs fell by 2% in the first quarter compared to a 6% increase in traffic in the same quarter last year.   Lanie Beck, Director of Corporate Research, Marketing & Communications, Stan Johnson Company, tells GlobeSt.com that fast food and fast casual concepts have remained popular with consumers, and a number of tenants are actively expanding in the space.  Sonic is one of the fastest growing tenants, Beck said, citing that it plans to open 1,000 new locations over the next 10 years.  Other established brands, including Chipotle, Jack In The Box, Starbucks and Taco Bell, have communicated plans to open new locations by the hundreds, while emerging concepts such as Slim Chickens “has an incredibly robust growth strategy” that could launch another 450 restaurants in the coming decade, she said.  “This volume of development and expansion bodes well for net-lease investors in the short and long term, as the market continues to struggle with an imbalance of supply and demand,” Beck said.  Steve Edwards, owner, The Edwards Company, tells GlobeSt.com that while visits may have declined to the QSRs in Q1 this is still the hottest growth sector in the restaurant and retail industry. “The appetite from the likes of Dutch Bro’s, Raising Cane’s, In & Out Burger and Starbucks continue to be insatiable.”  Headwinds Challenge Operators in Q1 2022  One reason for the fall in QSR visits is that comparing the two quarters is challenging given consumers’ recent unprecedented circumstances. In Q1 2021, the third round of stimulus payments, relaxed pandemic restrictions and the availability of COVID vaccines boosted online and physical visits to US restaurants by 3% compared to the same period a year before, according to The NPD Group.   In Q1 2022, the sector has also faced higher food and energy costs for restaurant consumers and restaurants. NPD Group also notes that consumer restaurant spending, which reflects higher costs opposed to increased visits, was up 4% in the quarter compared to the same quarter year ago when spending rose by 7%.  Also, full-service restaurants’ traffic increased by 2% compared to a year ago when visits declined by 7% and dine-in restaurant visits increased by 38% in the first quarter compared to a 45% decline a year ago.  “With the first quarter behind us, I’m optimistic that seasonal demand and the improving on-premises trends can help get the restaurant industry’s recovery back on track,” David Portalatin, NPD Food Industry Advisor and author of Eating Patterns in America, said in prepared remarks.