ATLANTA--Lowe’s Home Improvement Center in Gainesville, GA, about 48 miles from Atlanta, has sold $7.2 million or $58.09 per square foot with a cap rate of 9.22%, to a real estate investor based here. The seller was V&V Lakeshore, Ltd. of Youngstown, OH, a private investor. The purchase included a total gross leasable area of 123,948-square feet which includes shop space for two small tenants along with the Lowe’s store. The transaction also included nearly 13 acres. 

Tim Giambrone, vice president for investments and director of Marcus & Millichap’s national retail group in Atlanta, represented the buyer and seller in the deal.

The Lowe’s lease is for 20 years with less than four years remaining, says Giambrone. The price of a retail center is a function of the rent, he says. If the rent is low, the price will be low, says Giambrone, while declining to say what the current rent for Lowe’s is. The property sold for roughly $7.4 million at the end of 1996 and its appraised value in 2009, according to Hall County, GA records, was nearly $7.5 million.

Located at 1514 Skelton Road, the building stands adjacent to a WalMart SuperCenter and across the street from the Colonial Mall Lakeshore and a Super Target. The property has an estimated average daily traffic count of above 17,000 and over three million square feet of retail within a one-mile radius, according to Marcus & Millichap. Lowe’s has invested substantially in capital improvements to the building, demonstrating a commitment to stay in the area, also according to Marcus & Millichap.

Lowes has been at the Skelton Road location since the mid-1990s and is surrounded by other retail household names. Yet, Giambrone says that the buyer of the Lowe’s property is bearing some risk.

“There is less than five years left on a 20 year lease,” says Giambrone, “which means that the income stream may disappear in five years. The store can leave or stay or re-negotiate,” he says. “If they re-negotiate, that could change the income stream,” says Giambrone.

“Lowe’s has 1700 stores and these guys are reviewing store leases constantly,” says Giambrone. “There is a no guarantee they will stay.”