FORT LAUERDALE, FL—A three-tenant strip center in Coral Springs, FL has traded hands. A 1031 exchange grabbed the net leased asset for $3.5 million.
Doug Aronson, a director in Calkain's South Florida office, handled both sides of the transaction and completed the 1031 exchange. He says the deal required “extensive research” to satisfy the client's needs.
"Our client only wanted multi-tenant strip centers in one particular region of South Florida,” says Aronson. "The center had to have a presence with national or strong regional tenants, new or newer leases and of course be purchased at a reasonable cap rate."
After a great deal of searching, Aronson says he began negotiating for the purchase of a multi-tenant center. The tenants include Vitamin Shoppe, MattressOne, and Zona Fresca Fresh Mexican Grill.
"It was an arduous process, which can happen when one side is more motivated than the other to complete a deal," says Aronson. "But we got it done and both sides are happy and that's what really matters."
According to Calkain's month research report, net lease retail cap rates compressed across all sectors in November. This step down in cap rates is part of a cyclical trend seen annually—more investment activity naturally occurs at years end, increasing demand and lowering cap rates.
Some of the bolder drops occurred in pharmacies (6.92% to 6.06%) and convenience stores (6.60% to 6.23%). Both of those sectors feature high credit tenants such as Walgreens, CVS, and 7-Eleven which are among the highest demanded by net lease investors, Calkain reports.
Overall, 2013 saw cap rate compression generally halt and that trend is expected to continue in 2014 with higher interest rates causing cap rates to slide upward. Calkain reports this end of year decrease is due to natural market dynamics.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
