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8/21/20
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A single-tenant, 50.4k sf Target-occupied building in Phoenix sold for $20.3 mil, or $403/sf. The property is located at 1625 Camelback Rd, within a strong infill, urban location adjacent to Arizona State Route 51.
This location is Target’s first small footprint store in AZ, which opened in July of 2017. Target is on a long-term net lease with fixed rental increases.
Matt Berres, Samer Khalil and David Guido with Newmark Knight Frank represented the seller, an affiliate of Menin Development Inc, and procured the unnamed institutional buyer.
“Properties with investment grade tenants and long-term triple-net leases in desirable locations are commanding premium pricing in line with, or exceeding, pre-pandemic levels due to the dearth of inventory available,” said Berres. “This tenant checked all the boxes as an ideal net lease investment and traded at a record low cap rate for single-tenant net leased retail properties ($10M+) in Arizona over the past five years.”
Khalil added, “With the tenant owning most of its real estate, the pricing and deal terms were reflective of the rare opportunity to acquire a long-term net leased Target anywhere in the country, let alone in a prime Phoenix MSA location.”
The resiliency of Phoenix’s retail market fundamentals can be attributed to continued nation-leading population growth, according to NKF Research. Despite public health restrictions due to the pandemic, retail sales in Phoenix surged 7.5% in June propelled by automobile, apparel and electronic sales. While a few multi-tenant properties traded hands, the top sales this quarter were dominated by long-term, single-tenant triple-net lease assets.
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