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Research Library Wed, 04/27/2022 - 09:21
MarketSnapshot: Q1 2022
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 hbspt.forms.create({ region: "na1", portalId: "7279330", formId: "d5cea127-0985-4756-8591-d452dc67de3a" }); 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. Instead, predictions called...
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News & Insights
Net Lease Investors are Poised to Benefit from ALDI's Big Expansion Plans
Originally published by GlobeSt
Discount grocer ALDI has been on an expansion tear as of late—and that’s creating big opportunities for net lease investors.
“With its long-term leases in the 15- to 20-year range, zero landlord responsibilities, typical 5.0 percent rent increases every five years, and well-located real estate, ALDI has become extremely attractive to net lease investors,” says Tom Georges, a Director in Stan Johnson Company’s New York office. “With its rapid expansion, there are significant opportunities for investors to acquire newly built ALDI-tenanted properties. Just as a dollar store can enter a market that a Walmart or other big-box retailer cannot, due to lower population density, ALDI can be successful because of its smaller format and low-cost business model.”
ALDI stores are typically under 20,000 square feet, allowing the brand to serve markets that its competitors can’t with fewer employees. The chain is one of the most in-demand brands within the single-tenant net lease sector, particularly amid materials and labor shortages.
For investors, “the grocery sector is driving significant demand,” Georges says. “Grocery leased assets are highly sought-after properties for commercial real estate investors – not only do most customers still prefer to shop in person or have their online orders fulfilled by curbside pick-up, but grocery anchors help drive foot traffic to other inline retailers. Across the country, we’ve seen freestanding, single-tenant grocery stores as well as grocery-anchored shopping centers become very desirable portfolio additions.”
European-born ALDI currently boasts more than 2,150 stores in 38 states and is America’s fastest growing retailer across any sector. Its expansion plans put it among the largest brands by store count, according to Georges, exceeding Ahold Delhaize’s (Food Lion, Stop & Shop and Hannaford) 1,029 U.S. locations, and quickly approaching Albertsons Cos. Inc. and The Kroger Company store counts, which are 2,260 and 2,800 respectively.
Twenty states will see ALDI stores openings in the near future with Chicago, Illinois and the Gulf Coast region the most active.
“ALDI is a price-driven brand which attracts the value conscious consumer. Furthermore, with their unique brands and quirky characteristics, they’ve amassed a loyal following, with consumers in underserved markets hoping for a grand opening announcement,” Georges says. “In addition to wanting to serve their customer base, another driving factor in ALDI’s rapid expansion is looming competition from Lidl, another European grocer who’s announced expansion plans for U.S. markets. While Lidl’s ramp up hasn’t been as fast as originally predicted, ALDI hasn’t slowed down.”
March 21, 2022

News & Insights
More Landlords Investing in New Amenities, Services and Technologies
Originally published by GlobeSt
Office landlords are utilizing new strategies to adapt and win in this post-pandemic era. While maintaining and renewing tenants remains at the top of the list, investing in new amenities, services, and technologies to entice tenants back to the office has gained incremental steam.
Top business priorities identified by landlords in 2022 are maintaining and renewing tenants across their portfolios, leasing up vacant space within their buildings, and investing in new amenities and services to entice their tenants back to the office, according to a report by VTS.
The top technology investments for landlords this year are tenant experience software, marketing software, leasing management software and data and reporting software.
Managing tenant relationships and the return to office is much easier said than done, the VTS report explained.
“Today’s landlords overwhelmingly say that tenant retention and insight into amenity usage are top priorities for 2022, yet very few respondents say that they have full clarity into the current state of those relationships or what tenants need from their office spaces in this new era,” according to the report. It found that:
94 percent of landlords say that it is important to understand how tenants are utilizing their facilities and amenities, but only 23 percent are sure they have good visibility into that.
Only 12 percent of landlords are sure that they have adequate insight into what investments and features tenants require in order to safely return to work.
Tenants, Landlords Seek Full Clarity
Michael Casolo, Chief Revenue Officer at Unispace, a global workplace strategy, design and construction firm, tells GlobeSt.com that it’s not only landlords who don’t have full clarity into what tenants need from their office spaces, it’s the tenants as well.
“The vast majority of companies are taking a ‘wait-and-see’ approach before instituting major design changes to their offices,” Casolo said. “Company leaders recognize that the office has undergone a fundamental shift in the past two years—going from a place that you go as a matter of routine to a place that you go to for a specific purpose.
“As employees return and experience being back in the office environment, companies are opting to start with small flexible design changes that will have a big impact. For example, to smooth the transition between working from home and being back in the office, workplace designers are creating more intimate settings so that the space functions like an office but feels like a living room.
He said the days of rows and rows of desks lined up are gone. “Instead, companies are intentionally breaking up workstations with biophilia and clustering them in smaller groups,” Casolo said. “We expect that companies will begin instituting major renovations in the next few months as they not only get a better understanding of how employees are experiencing the office, but also as they get feedback from employees and begin to incorporate it into their hybrid work strategy.”
Alleviating Friction Makes a Difference
Petra Durnin, head of market analytics, Raise Commercial Real Estate, tells GlobeSt.com that in order to entice tenants into the office, the space and the building must alleviate friction. “Amazing communal spaces and conference rooms equipped with state-of-the-art tech as well as dedicated seating for heads down work serves both collaborative teams and fulfills solo work needs.”
She said that operational windows, natural light, indoor gardens, and outdoor spaces were once nice-to-haves but are now crucial to the employee experience and engagement.
“Onsite amenities such as child daycare, valet parking, fitness/yoga classes, and even medical/dental offices can go a long way to helping employees manage their work/life balance,” Durnin said. “Additionally, concierge services can expand on what cannot be provided onsite and further reduce the friction that can prevent employees from being in the office.”
Health and Safety Remains a Priority
Perhaps not surprisingly, the most notable change in the last two years has been a focus on cleaning processes, touchless systems and air filtration, Amy Moyer, managing partner, Stan Johnson Company, tells GlobeSt.com.
“In the aftermath of COVID-19, landlords have been eager to show off building improvements that illustrate their commitment to providing a safe workplace,” Moyer said. “But with many employers continuing to evaluate their long-term office space needs, landlords are needing to differentiate themselves and their properties in order to entice tenants to stay, as well as attract new occupiers.
“While traditional tactics like increased tenant improvement dollars and rent abatement continue to be used, landlords are getting creative and trying to appeal directly to employees, not just upper management.
“Wellness amenities have become one of the most popular offerings, providing tenants access to state-of-the-art fitness centers, discounts on gym memberships, partnerships with home equipment brands like Peloton, and much more.”
Trend Toward Partnering with Tenants
Andrew J. Eichberg, Managing Director of Stream in Washington, D.C., tells GlobeSt.com that even before the pandemic, sophisticated owners were investing considerably in conference centers, private lounges, and high-end rooftop terraces in trophy buildings.
“Those same owners are now re-evaluating how to further enhance their amenity offerings, with an eye toward more direct connections with their tenants,” Eichberg said. “Owners now recognize that engaging and partnering with their tenants to create a more welcoming and enjoyable work environment will help with efforts to attract employees back to the office.
“The activation of the amenity spaces to engage tenants throughout the day—think rooftop yoga classes, wine-tasting in the lounge, art classes in the conference center—will set some buildings apart, especially those that can tie the use of such spaces to a building app that makes it all easy on the user.”
Firms Still Want a ‘Landing Pad’
And even as companies move to hybrid work schedules, the need for these amenities will remain high, especially for collaborative and creative knowledge workers, Rob Naso, head of asset management, BentallGreenOak, tells GlobeSt.com.
“Firms will want to have a landing pad for these teams but won’t require these workers to always be there,” Naso said. “Lifestyle amenities, a focus on health, wellness and sustainability, and highly functional/efficient space will be the expectation of these workers and their employers.
“We’ve learned a lot about the evolving needs of tenants during this experience with COVID and there are some unique opportunities to bring the best of work-from-home elements to an office environment that is cognizant of the changing nature of work today. Here’s where owners and tenants have a unique opportunity to cooperate on the future of work space and become partners in each other’s success.”
March 18, 2022

Press
Stan Johnson Company Brokers Sale of North Georgia Strip Center for $3.1 Million
Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a multi-tenant retail strip center located at 216 Carpenters Cove Lane in Cornelia, Georgia. The 6,668-square-foot center is leased to Starbucks, Cricket Wireless and Jersey Mike’s Subs. Stan Johnson Company’s Billy Benedict represented the seller, a Florida-based investor group. The buyer, Atlanta, Georgia-based Newburger-Andes, acquired the property for $3.1 million reflecting a 5.90 percent cap rate.
“This is a very prominent center that sits at the ‘A1’ position in a trade area that supports the surrounding five cities of Cornelia, Demorest, Mt. Airy, Baldwin and Clarkesville,” said Benedict, Associate in Stan Johnson Company’s Alpharetta, Georgia office. “The strength of the location is evidenced by the tenants’ tremendous sales volumes.”
The newly built center was constructed in 2019 on a 1.25-acre parcel with direct frontage to U.S. Highway 441 South. At the time of sale, there was one available suite totaling 1,750 square feet that was being considered by a variety of national tenants. The buyer was comfortable with the prospects and ability to lease this space, bringing the center to 100 percent occupancy. The property is an outparcel to a high-volume Lowe’s home improvement store and is located approximately 70 miles northeast of downtown Atlanta.
March 18, 2022

Press
Stan Johnson Company Arranges 1031 Exchange Sale of Windy Hill Crossing Shopping Center in Atlanta, Georgia
Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Windy Hill Crossing located at 2311 Windy Hill Road in Marietta, Georgia. The 32,000-square-foot unanchored center features a mixture of restaurants and service retailers including FedEx Office and Jackson Hewitt. Billy Benedict and Jeff Enck of Stan Johnson Company represented the 1031 exchange buyer, a locally based group of investors. The seller, represented by Kyle Stonis of SRS Real Estate Partners, was an investor group based in nearby Smyrna, Georgia. The property traded for approximately $6.0 million reflecting a 6.47 percent cap rate.
“Windy Hill Crossing is in a very prominent location within Atlanta’s northern suburbs, and there are several major redevelopments in the immediate area,” said Benedict, Associate in Stan Johnson Company’s Alpharetta, Georgia office. “The center has had very stable tenancy over the years, and at the time of sale, there was a new, pending lease that brings the property’s occupancy to over 96 percent.”
The shopping center was built in 1986 and is situated on 3.4 acres at the signalized intersection of Windy Hill Road and Highway 41, Marietta’s main surface thoroughfare.
March 17, 2022

News & Insights
Spotlight on Tulsa: A Hidden Gem for Commercial Real Estate Investors
Originally published by Texas Real Estate Business
Situated on the banks of the Arkansas River in northeast Oklahoma’s Green Country, Tulsa is a hidden gem for residents, employers and commercial real estate investors.
Once recognized as the oil capital of the world, Tulsa has become a growing economic base for a variety of industries, including energy, finance, aviation, telecommunications and technology. Attractions and features of the city include the historic Route 66, the Philbrook and Gilcrease Museums, an Art Deco-inspired downtown, the award-winning Gathering Place Park and a vibrant resurgence of intown neighborhoods.
Business, Population Boom
Tulsa’s central U.S. location and operating costs that run below the national average, as well as a cost of living that is one of the lowest in the country for metro areas, make it incredibly desirable for businesses of all sizes.
To help drive awareness during the pandemic, the city launched a rejuvenation project called “Tulsa Remote” that provided financial bonuses to attract more affluent remote workers and enhance the city’s diversity and community.
Tulsa’s attractive characteristics, combined with the metro’s active efforts, have contributed to a boost in population growth over the last few years. In 2021, the U.S. Census Bureau revealed that the greater Tulsa metro now exceeds 1 million residents for the first time, with 400,000 living in Tulsa proper. This reflects an influx of more than 7,000 people between 2019 and 2020.
Not only does this growth secure Tulsa’s position as the second-largest city in Oklahoma, but also, with 25 percent of the state’s population in residence, the 1 million-plus designation opens the door even wider for the state to compete with larger cities on economic development projects. With a strong base of small businesses in place, along with corporate residents of all sizes — Google, Amazon, QuikTrip, Bank of Oklahoma, Mazzio’s, RibCrib — the local employment landscape is rich.
Growth Draws Retail
Brick-and-mortar retail has suffered during the pandemic, with consumers relying heavily on online shopping. As a Tulsa resident during the pandemic and one of those 7,000 people who moved to Tulsa starting in 2019, I can personally attest to the hardships faced by many local retailers and national chains alike.
In the early days of the pandemic, Tulsa’s retail corridors felt like ghost towns. Essential retailers remained open but were no longer driving foot traffic to inline shops, and many independent businesses had a difficult time reopening once shelter-in-place mandates were lifted.
Fast-forward two years from the beginning of the pandemic, and these same retail corridors are seeing a resurgence of consumer activity, along with new construction. Retail developers are capitalizing on the city’s recent growth, and new retail establishments are opening doors across the metro area.
This is happening everywhere, from downtown to south Tulsa’s established neighborhoods to the growing suburbs of Jenks, Bixby, Broken Arrow, Sapulpa, Sand Springs and beyond.
To assist with these growth efforts, the City of Tulsa has contributed nearly $885 million and multiple assets to promote economic development and other capital improvements. The city has experienced excellent growth in single-tenant net lease (STNL) retail and new unanchored strip centers leading to a true renaissance in many neighborhoods.
In the retail sector, Oklahoma-based grocer Reasor’s has been investing in renovating its stores in an effort to compete with higher-end concepts like Whole Foods Market and The Fresh Market. The 66,455-square-foot store at Summit Square underwent a $3 million interior and exterior renovation project in 2021, further demonstrating the grocer’s commitment to the site and consumers in the surrounding area. This was part of a larger facelift at Summit Square that included a new roof, updated signage and parking lot upgrades, helping the center sell for $17 million.
Another revitalization project is occurring with the infrastructure around the Woodland Hills Mall, which is a significant retail corridor in the south Tulsa area. The mall boasts over 140 retailers, including Rue21, IKIGAIDO Umami Fries and OFFLINE by Aerie, all of which opened in December 2021.
In recent months, we’ve seen retail centers in the immediate area command the attention of national investors, including a California-based investor who acquired a two-tenant big box center adjacent to the mall for $9.1 million.
What This Means for Investors
Infrastructure improvements and the construction of new STNL retail spaces across the metro are opening the doors for incredible investment opportunities, but not just for retail investors or local real estate owners.
In addition to the growth seen across the retail sector, growing populations require increased medical/healthcare support. There are 29 hospitals in and around Tulsa that are supported by urgent care clinics, surgical centers and independent medical office buildings, many of which are newly built. Dialysis centers, dental providers and emergency rooms have also grown across the city.
Although Tulsa is not seeing strong levels of new industrial development, the inventory of existing properties is high. When these second-generation assets come to market, they can offer stabilized — as well as value-add — opportunities for investors.
The same is true of office properties. While the on-market supply of single-tenant office buildings is incredibly low across the metro, investors focused on multi-tenant assets have a larger selection to choose from, including the nearly 1 million-square-foot Warren Place complex where Stan Johnson Co. is headquartered.
Overall, the residential boom experienced in recent years, along with Tulsa hitting 1 million residents, has converted the city into a highly desirable market for both small and large employers. The city is attracting talent as well as new residents who are contributing to economic growth and diversity, and the commercial real estate investors who have Tulsa on their radar will be among the ones to benefit.
March 17, 2022

News & Insights
What ALDI’s Rapid Expansion Means for Net Lease Investors
Originally published by Shopping Center Business
The pandemic put a spotlight on essential retailers, and despite a resurgence across nearly all retail categories, the grocery sector remains top of mind for investors. Shopping Center Business recently reached out to Tom Georges, director in Stan Johnson Co.’s New York office, to discuss current trends impacting the single- and multi-tenant grocery industry and explore why European discount grocer ALDI has emerged as a growth leader.
SCB: How strong is demand for grocery retailers in today’s market? Why?
Georges: Over the past two years, several retail categories have proven themselves to be pandemic resistant, and the essential nature of grocery stores puts them right at the top of that list. With today’s sparsely stocked shelves, labor shortages at food processing companies and increased freight costs, however, grocery stores are faced with their fair share of challenges. But for investors, the grocery sector is driving significant demand. Grocery leased properties are highly sought-after properties for commercial real estate investors — not only do most customers still prefer to shop in person or have their online orders fulfilled by curbside pick-up, but grocery anchors help drive foot traffic to other inline retailers. Across the country, we’ve seen freestanding, single-tenant grocery stores as well as grocery-anchored shopping centers become very desirable portfolio additions. And within the single-tenant net lease sector, one of the most in-demand brands is discount grocery retailer, ALDI.
SCB: What’s driving ALDI’s rapid expansion and what regions are they targeting for growth?
Georges: With over 2,150 stores in 38 states, ALDI is one of America’s fastest growing retailers across any sector. Within the grocery sector, the company’s current plans for expansion put it among the largest brands by store count, already exceeding Ahold Delhaize’s (Food Lion, Stop & Shop and Hannaford) 1,029 U.S. locations, and quickly approaching Albertsons Cos. Inc. and The Kroger Company store counts, which are 2,260 and 2,800 respectively. Germany-based ALDI, with U.S. headquarters in Batavia, Illinois, is a price-driven brand which attracts the value conscious consumer. Furthermore, with their unique brands and quirky characteristics, they’ve amassed a loyal following, with consumers in underserved markets hoping for a grand opening announcement. In addition to wanting to serve their customer base, another driving factor in ALDI’s rapid expansion is looming competition from Lidl, another European grocer who’s announced expansion plans for U.S. markets. While Lidl’s ramp up hasn’t been as fast as originally predicted, ALDI hasn’t slowed down. Currently, 20 states have planned store openings in the near future with Chicago, Illinois and the Gulf Coast region seeing the most robust activity.
SCB: How is ALDI’s expansion creating opportunities for net lease investors?
Georges: With its long-term leases in the 15- to 20-year range, zero landlord responsibilities, typical 5.0 percent rent increases every five years, and well-located real estate, ALDI has become extremely attractive to net lease investors. With its rapid expansion, there are significant opportunities for investors to acquire newly built ALDI-tenanted properties. Just as a dollar store can enter a market that a Walmart or other big-box retailer cannot, due to lower population density, ALDI can be successful because of its smaller format and low-cost business model. With floorplates typically under 20,000 square feet, or roughly the size of a drugstore, ALDI is able to effectively serve markets that its competitors cannot and adequately staff their stores with fewer employees. Combined with their quarter-for-a-cart and no bagging policies, ALDI-exclusive brand items and shorter hours, ALDI’s cost-conscious business model has been a recipe for success.
March 16, 2022

Press
Stan Johnson Company Brokers 1031 Exchange Sale of 7-Eleven Convenience Store Near San Francisco, California
Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a retail convenience store and gas station leased to 7-Eleven. Located at 3868 Delaware Drive in Fremont, California in the San Francisco Bay area, the 2,400-square-foot property sold at a 3.25 percent cap rate. Mike Matter of Stan Johnson Company represented the seller in a 1031 exchange. The property was acquired by a California-based private investor for approximately $2.3 million.
“There was significant interest in the offering due to the location having high barriers to entry, a short-term lease and low relative rents,” said Matter, Director in Stan Johnson Company’s Newport Beach, California office. “We were able to generate seven offers and ended up selling over the list price.”
7-Eleven has occupied the property since it was originally built in 1977. The site is situated on 0.5 acres in a dense residential area just north of an industrial complex with national operators including the 4.4 million-square-foot Tesla manufacturing center. The tenant operates on a corporate guaranteed triple net lease.
March 16, 2022

News & Insights
Zenith iOS Release Date and News
Originally published by ConsideringApple
J.P. Morgan Global Alternatives and Zenith IOS have recently rolled out a new $700 million business together to build a nationwide industrial outdoor storage platform. Within the following two years, the partners hope to create a portfolio of IOS properties worth $1 billion.
The Commercial Observer, which reported the collaboration, said that Brooklyn-based Zenith frequently targets low-coverage industrial sites. The group, which also owns Zenith IOS, intends to build assets in high-growth markets.
Industrial outdoor storage is “rapidly emerging as a new separate subgroup of the industrial asset class,” according to Ben Atkins, co-founder CEO of Zenith. Abingdon Square Partners, which Atkins founded and leads, is a real estate investment firm.
Observers in the sector should not be surprised by the new cooperation. J.P. Morgan Global Alternatives is J.P. Morgan Asset Management’s alternative investing arm, and the business stated in its 2022 Global Alternatives Outlook report that it “will be focusing on an array of industries in the United States that are benefiting from high consumer demand.” “Industrial outdoor storage facilities, including truck terminals, parking, and equipment storage in critical metropolitan sites,” according to the report’s list of industries.
Zenith and J.P. Morgan plan to focus on real estate options in up-front areas in major metros and high-growth areas across the United States. By the end of February 2022, the joint venture expects to have concluded $125 million in purchases.
The joint venture’s portfolio currently includes four properties in Dallas: 2601 Sea Harbor Road, 4801 W. Ledbetter Drive, 6410 Singleton Blvd., and 2118 California Crossing, approximately 27 acres. 2118 California is an enclosed site located 1 mile from Interstate 35 and 10 miles from Dallas Fort Worth Airport. With the help of a loan from FirstCapital Bank of Texas, the joint venture purchased the asset from an Anani Pumping business.
Industrial’s rising star
Outdoor storage is becoming valued among consumers and those seeking a safe and attractive resting spot for their cash in the industrial real estate sector. For starters, as detailed in a Fall 2021 research by real estate firm Stan Johnson Co., industrial outdoor storage sites, also known as industrial service facilities, are commonly found in infill locations and are in short supply, resulting in higher residual values than conventional industrial assets. There’s a lot more to the specialty to pique an investor’s interest.
“The tenant renewal rate in this category is also quite high, owing in part to the limited supply of similar buildings and higher-than-average replacement prices.” According to the Stan Johnson research, “many of these facilities are poised for future alternate uses, but most landlords find that re-tenanting is just not an issue.” “Supply is scarce, and tenants in this sector benefit from the e-commerce and building booms, which show no signs of slowing down.” That produces stickiness that more typical industrial facilities don’t always have, which helps tenants stay put.”
Imperium Capital, which said in September 2021 that it spends more than $250 million in industrial outdoor storage assets over the next year, is another company targeting the IOS sub-sector. In three transactions in the third quarter of 2021, Rexford Industrial Realty acquired around 110 acres of income-producing, low-coverage industrial outdoor storage sites.
Conclusion
The leading JP Morgan and prominent Zenith IOS have formed a new venture to develop a national industrial outdoor storage (IOS) platform. The platform will build an institutional portfolio of IOS assets to suit expanding user demand across supply chain networks. By the end of February, the joint venture should have completed approximately $125 million in acquisitions.
March 16, 2022