Why Single-Tenant Assets Are Seeing Ultra-Low Cap Rates

TAMPA, FL—All-time low cap rates are running steady for certain asset types. And single-tenant properties are among them.

Franklin Street points to the sale of a 5,000-square-foot Amscot in Valrico, FL, as a prime example. The single-tenant building traded for $1.78 million. At an 8.8 percent capitalization rate, the sale represents $356 per square foot.

Jonathan Graber and Rafeal Wright, both of Franklin Street, represented the seller in the transaction, a local investor. The buyer is a group of local investors based out of Orlando.

“We are finding with the lack of single-tenant properties on the market today, coupled with the high demand, cap rates are still at all-time lows,” Wright tells GlobeSt.com. “Down the road, we expect cap rates to run steady until the interest rate environment and inventory levels increase.”

The Amscot is located at 2022 State Road 60 in Valrico near State Road 60 and Valrico Road. The single-tenant property is near recently-remodeled shops with strong surrounding retailers and high household income levels. The new owner plans to hold the property as an investment.

“Amscot is a solid regional retailer with major plans of expansion mostly in the South Florida market,” Graber tells GlobeSt.com. “The buyer was very happy with their purchase and plans on double-digit cash on cash returns.”