Small Strip Center Fetches $4M-Plus

SACRAMENTO-A 22,750-sf 90% leased strip center here has changed hands for $4.35 million, which was slightly above the list price and equates to an initial cap rate in the 6% range. The buyer and seller were private family trusts; CB Richard Ellis brokered both sides of the transaction.Fronting Cottage Way at Fulton Avenue, the center is located near several car dealerships. The center's anchor is a stand-alone Kragen Auto, which has been a tenant for 20 years. The seller's broker, John Gianulias of CBRE's Sacramento office, tells GlobeSt.com the strip retail on the site has two empty units, each about 1,100 sf. He suspects it won't be difficult to lease the new spaces given the submarket has a vacancy rate in the low single digits.The buyer's broker, Trevor Thorpe of CBRE's San Francisco office, tells GlobeSt.com there's additional upside to be had as leases rollover because rents in the center average $1.20 per sf per month while the average asking rate in the submarket is closer to $1.90 per sf. Two-thirds of the in-line tenants have leases that are expiring in the near term, he says.Thorpe says the area has seen some major changes in recent years, including the renovation of numerous auto dealerships along Fulton Avenue and the redevelopment of a former Big Kmart into a new Home Depot. "Our clients felt secure buying a center below replacement value with a solid near-term upside potential," he tells GlobeSt.com. Nicole Hauscarriague worked with Thorpe in representing the buyer. John DuBois worked with Gianulias.