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KNOXVILLE, TN—Although investors are keen on grocery-anchored retail shopping centers, a deal in the Knoxville area shows that they are also interested in standalone grocery stores. A nearly two-year-old Food City grocery store has traded hands for $4.7 million in Morristown, a hub between Knoxville and the Tri-Cities.
Nancy Miller and Sheree Strome Berk both vice presidents of Bull Realty’s Net Lease Investment Group, represented the seller, Foodmor Associates LLC. Bull Realty broker Tom Kallenbach represented the buyer, B.B. & J. Holdings.
Miller tells GlobeSt.com the Morristown market is similar to the national picture—there is strong demand for retail but it remains a challenge to get projects financed. There is significant growth in restaurants, she says, food stores and the medical sector in this region due to locals wanting to stay close to home.
“Regardless of the market, grocery stores are performing well and remain a favored target of investors seeking a stable tenant and strong returns,” Miller tells GlobeSt.com. “Food City tends to locate in small-to-medium-size markets, and this store has proven particularly popular among the residents of the nearby lake and mountain homes, as well as people who vacation in the area.”
The 47,600-square-foot, stand-alone store sits on six acres and has energy-saving features, a pharmacy, a deli, video and fuel center. The store is part of a larger development, the Barton Springs shopping center. The buyer assumed a 20-year, non-recourse loan secured by the property.
“This sector is as strong as lye soap, thanks to the stability of tenants and the simple fact that, even in a down economy, people need to eat,” Berk tells GlobeSt.com. “This stand-alone store opened less than two years ago, and it will serve as a magnet for additional single-tenant retail on the available parcels of this development. An O’Reilly Auto Parts store will open later this year on an adjacent outparcel."
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