Trends & Insights

Originally published by GlobeSt Throughout the majority of the pandemic, office investors were widely driven by a flight-to-quality, as those assets offered the most resilience amid demand uncertainty. While core and core-plus office properties are still in favor, value-add liquidity is quickly recovering as clarity surrounding rent growth and the future of office demand improve, according to new findings from JLL.  Thus far in 2021, value-add is the most sought-after profile with the share of value-add office properties in the current pipeline recovered from declines in 2020, and now recovering towards the 2017-2019 levels, JLL said. Additionally, value-add buyer pools are broadening after significant impact in 2020 and have seen the most improvement in 2021 relative to 2020. “We’re seeing investors pivot back to previously out of favor sectors like office and hospitality that can produce very attractive yields,” said Coleman Benedict, senior managing director and co-head of JLL’s National Office Practice, in prepared remarks. “As part of this rotation back to office, value-add is definitely back on investors’ radar reinforcing the investment community’s confidence in the long-term stability of the office market.” ‘Uncertainty No Longer Clouds’ Multi-Tenant Asset Sectors Ryan Roedersheimer, director in Stan Johnson Company’s Cincinnati office, specializes in nationwide multi-tenant investment property sales. He tells GlobeSt that he has seen a resurgence of interest in recent months for a variety of asset classes that had demand levels squeezed by the pandemic. “The most renewed interest is in multi-tenant assets—this includes office and retail, with an emphasis on value-add properties,” Roedersheimer said. “Uncertainty no longer completely clouds these sectors. Workers are returning to office environments and consumers are returning to stores. “For investors who’ve been chasing yield, they’re finding fewer options in the red-hot industrial market, and this dynamic is leading them to look elsewhere. With suppressed demand for multi-tenant assets in the last two years, there’s a lot of opportunity here for investors, and it will be interesting to see the story play out in 2022.” The Spector of Hybrid Work  To be sure, questions remain surrounding the impact of hybrid work on office demand. However, the majority of corporate occupiers have signaled that the office will remain the center of the work ecosystem. Hybrid work’s net impact on space usage and footprints will be relatively minor. Leasing activity supports this thesis, JLL notes, which nearly surpassed 40 million square feet in Q3 2021 for the first time since the onset of the pandemic and bringing the trailing six-month transaction total almost 40% above the same time period in 2020. Recent sales also drive home the rediscovery of value-add office’s appeal. There was the $155 million sale of Mount Eden Research Park in the Bay Area and the $56.5 million sale of CASA in Phoenix. “The amount of interest we received for Mt. Eden was truly astounding,” said Senior Managing Director Rob Hielscher, JLL Capital Markets. “A combination of value-add and life sciences drove pricing and the number of bids upward in a highly competitive process.” The CASA office sale set a new price-per-square-foot record for Phoenix’s Piestewa Peak submarket.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a 60,000-square-foot industrial distribution facility. Located at 13 Chocksett Road in Sterling, Massachusetts, the property is fully leased to Utz Quality Foods. In addition to the Utz brand, the company is also known for Zapp’s, Golden Flake and TGI Fridays Snacks, among other potato chip and snack foods. Stan Johnson Company’s Erik Lundberg represented the seller, an individual investor based in Leominster, Massachusetts. The buyer was NB Partners III LP, a Wakefield, Massachusetts-based institutional investor. The asset traded for $4.2 million. “We were able to achieve full asking price on an off-market basis for this property that features a short-term lease in place with Utz Quality Foods,” said Lundberg, Associate Director in Stan Johnson Company’s Tulsa, Oklahoma headquarters. The two-story, Class B industrial property was built in 2006 and is situated on 4.8 acres just minutes from Interstate 190. Sterling, Massachusetts is located just 20 minutes north of Worcester and approximately 40 miles west of the Boston metro area.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of 2420 Gulf to Bay Boulevard in Clearwater, Florida. The 8,000-square-foot multi-tenant retail center was 45 percent occupied at the time it was purchased by a local developer for $1.4 million. Jeff Enck of Stan Johnson Company represented the seller, a group of private investors based in Atlanta, Georgia. Currently leased to three tenants, the strip center also features two vacancies totaling 4,400 square feet. “While the property had excellent visibility and traffic, it was limited by use restrictions for redevelopment by the city,” said Enck, Associate Director in Stan Johnson Company’s Atlanta, Georgia office. “We received about a dozen offers and were able to close with a buyer who needed to satisfy a 1031 exchange with plans to develop it later down the road.” The property was originally built in 1963 and is situated on 0.94 acres. Current tenants operate on short-term gross leases, offering opportunities for lease-up or redevelopment. The exceptionally located property is just 20 miles west of Tampa, Florida in a densely populated residential and retail corridor. With 60,000 vehicles per day on the site’s main roadway frontage, and convenient access to U.S. Highway 19 North, the area’s main north-south artery, the center benefits from nearby retailers and shopping areas that include anchors such as Home Depot, Sam’s Club, Target, PetSmart, Costco and more.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a shopping center located at 825 Seaway Drive in Fort Pierce, Florida on Hutchinson Island. Harbour Cay is a 10,530-square-foot unanchored shopping center and is fully leased to a diverse mix of restaurant, service and professional tenants. Stan Johnson Company’s Jeff Enck and Mike Philbin represented the seller, a Jupiter, Florida-based developer. An individual investor from Lighthouse Point, Florida purchased the asset for $4.1 million reflecting a 6.08 percent cap rate. “Harbour Cay is a seven-tenant unanchored retail center on the coast of Fort Pierce, Florida,” said Enck, Associate Director in Stan Johnson Company’s Atlanta, Georgia office. “Brand new retail properties have been highly sought after this year, and while some of the tenants at the property had yet to open, we were able to find an exchange buyer to close on the property before all the tenants took occupancy.” The newly built property is situated on more than 1.50 acres at the corner of the entrance to Harbour Isle Marina and luxury condominium community. Centrally located between Cocoa Beach and West Palm Beach, Hutchinson Island is a tourist and vacation destination on Florida’s Atlantic coast. The site features direct frontage on Highway A1A in an area with limited retail. All tenants operate on triple net leases which commenced in 2021 at the time construction was completed.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a net lease bank branch located at 5938 FM 2920 in Spring, Texas. Mark Lovering of Stan Johnson Company exclusively represented the Texas-based private seller. The buyer, a Milwaukee, Wisconsin-based investor, was represented by Stan Johnson Company’s Matt Lipson and Mike Philbin. The asset traded at a 6.00 percent cap rate, although the price was not disclosed. “This is a trophy site for Bank of America, which has operated at this location since 2003 and benefited from strong annual deposit growth,” said Lovering, Associate Director in Stan Johnson Company’s Chicago, Illinois office. “Despite several significant delays caused by COVID-19, we successfully navigated the deal across the finish line with the buyer’s 1031 timeline.” The property was built in 2003 and is situated on 1.7 acres in a northern suburb of Houston, Texas. The site features a drive-thru, has outstanding visibility and is strategically located as an outparcel to a Walmart-anchored shopping center. “This was a great acquisition for our buyer who needed to satisfy a 1031 exchange. He loved the location and the credit behind the lease,” added Lipson, Associate Director in Stan Johnson Company’s Portland, Oregon office.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale leaseback of a Pilot Travel Center located at 901 Bankhead Highway West in Birmingham, Alabama. The 9,790-square-foot convenience store sold for approximately $9.4 million reflecting a 7.0 percent cap rate. Matt Lipson and Mike Philbin of Stan Johnson Company represented the buyer, Brodersen Management Corporation based in Milwaukee, Wisconsin. The seller was Acworth, Georgia-based Mountain Express Oil Company. “This was a great deal for the buyer and tenant,” said Lipson, Associate Director in Stan Johnson Company’s Portland, Oregon office. “The tenant was purchasing a location from Pilot and rather than use traditional business financing, they found a real estate buyer to help fund the acquisition. Since you have to merge an asset purchase agreement with the purchase and sale agreement to ensure a simultaneous close, structuring a sale leaseback to fund an M&A is slightly more challenging than a typical net lease transaction. However, both parties maintained healthy communication and were experienced enough to get this across the finish line.” The property was originally built in 1995 and includes a Wendy’s quick service restaurant on-site. The 7.4-acre parcel is strategically located just north of Interstate 20 at a signalized intersection. “I like these types of transactions because the buyer is able to purchase an attractive net lease asset at a higher yield than a traditional deal, and the tenant is able to get into the property free of loan contingencies and with limited acquisition costs,” Lipson added. “Our client is also thrilled that their new tenant will have plenty of working capital that would normally be reserved for the cost of an acquisition.”  

Excerpt of article originally published by GlobeSt.com Overall, the retail market is in a very healthy space as essential retailers have been thriving. So says Mike Sladich, Regional Director and Partner of Stan Johnson. GlobeSt.com spoke with Sladich among a few other retail experts about all things retail in preparation for the upcoming RECon convention. The event will be hosted this year by ICSC on December 5-7 in Las Vegas. According to Sladich, tenants who are susceptible to e-commerce, have effectively experienced the worst-case scenario for brick-and-mortar sales. But he says, “these non-essential retailers can now better model their businesses moving forward and optimize their spaces as consumers return to stores.” Additionally, he says, “as we review financials and sales data for sale-leaseback candidates in the retail sectors perceived to be hit hardest, like casual dining restaurants, family entertainment centers and fitness centers, we’re seeing that their business in recent months has surpassed pre-COVID-19 levels.” According to Sladich, the pent-up consumer demand for these experiential retail tenants has been substantial and may be even more important moving forward as the population desires a return to routines.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of two freestanding Arby’s quick service restaurants for a 1031 exchange client. Brian Lane and Emery Shane of Stan Johnson Company represented the Oregon-based seller, The Garfinkel Trust, in the disposition of one location at 1019 Nashville Pike in Gallatin, Tennessee. They then acquired a second restaurant located at 470 Cummings Street in Abingdon, Virginia in a 1031 exchange. The buyer of the Tennessee property was an individual investor based in Lebanon, Tennessee. The seller of the Virginia location was a Bristol, Tennessee-based franchisee. “We were able to help a long-time client complete a 1031 exchange that will secure their continued retirement for the next 20 years,” said Shane, Senior Director in Stan Johnson Company’s Alpharetta, Georgia office. “We were able to negotiate a closing extension on the Tennessee property and successfully close on the Virginia property just days later, ensuring we minimized the investor’s loss of income,” added Lane, Associate Director in Stan Johnson Company’s Alpharetta, Georgia office. “They traded out of the Gallatin property that only had just over five years remaining on the lease and acquired the Abingdon location that featured a brand new 20-year lease.” The Tennessee asset sold for $3.2 million reflecting a 6.67 percent cap rate with five years remaining on the lease. The Virginia property was purchased for approximately $3.1 million at a 5.35 percent cap rate for a new 20-year lease.