"This originally went out with a 30-day listing period, but we've had so much interest in the property we've had to cut that listing-period short," comments Scott Strohl of Marcus & Millichap Real Estate Investment Brokerage Co.'s Detroit office. Strohl, along with Paul Kerber, is marketing the property.
Strohl tells GlobeSt.com that a long-term lease by the state of Michigan, ending in 2029, is driving both buyer interest and the high price of the class A property, located at 400 S. Pine St. "There's a 23-year lease there with the state government," he says. "You have a lot of security with that, and it's why we're able to push the cap rate and the list price." The cap rate is at approximately 6%. Additionally, the tenant, which is paying a base rent of $12.23 per sf, well below the area's market rate, has a 2.5% per year increase built into the lease.
Constructed in 1989 as a build-to-suit, for the state, a renewal of a lease due to expire in 2009 gave the owner/developer the incentive to put it on the market. "He realized that once the state of Michigan extended that lease for another 20-plus years, the market would respond to it in a favorable way," Strohl comments. "And it has."
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