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Single-Tenant Building Sales Prove Lucrative in South Florida

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Single-Tenant Building Sales Prove Lucrative in South Florida

Owners Look to Maximize Returns at Shopping Centers

McDonald's in St. Augustine, Florida, is for sale. Photo: CoStar
McDonald’s in St. Augustine, Florida, is for sale. Photo: CoStar

The Shopping Center Group is the latest real estate firm to enter South Florida’s routine but lucrative niche division of selling single-tenant net-lease properties, where the landlord is not responsible for certain extra costs associated with commercial building ownership.

Net lease is an industry class of freestanding buildings, such as restaurants, drugstores, banks and gyms leased by established national tenants. Net-lease building sales in Miami-Dade, Broward and Palm Beach counties hit $235.9 million last year, up from $224.8 million in 2017, according to CoStar data. Nationally, sales totaled nearly $13 billion last year after peaking at $15.3 billion in 2015.

Triple-net leases are considered one of the safest investments, where the tenant typically pays a base rent, plus the property owner’s building expenses, including taxes, insurance and common-area maintenance.

The Shopping Center Group started its venture with four listings in Florida and plans to expand across the Southeast. Tyler Freeman heads the new division in partnership with Anthony Blanco, the brokerage’s director of investment sales.

“There’s a significant amount of activity in this right now because you’ve got a lot of institutional investors looking to dispose of properties and a lot of private investors looking to buy,” Freeman said in an interview.

Many of the net-lease properties for sale are part of shopping centers and the owners want to maximize returns by selling some of the outparcels separately.

“I believe this is a trend that’s going to continue,” Blanco said. “There are a number of shopping centers across the nation where the owners can carve up the outparcels to bring in liquidity.”

Last summer, Colliers International South Florida launcheda net-lease division. Other firms, including Marcus & Millichap and CBRE, also have the specialty.

“If you want to be a true, full-service broker, you want to be able to offer this to your clients,” said Doug Aronson, a senior vice president who heads Colliers’ net-lease division in South Florida.

The niche division has grown sharply in the past decade as interest rates plummeted following the Great Recession, Aronson explained.

“With those meager returns, investors were saying, ‘Where else can I put my money?’” he said.

The Shopping Center Group, founded in 1984 and based in Atlanta, provides services to tenants and landlords. Its investment sales division has sold multitenant properties for the past seven years and is expanding its offerings by taking single-tenant, net-lease listings.

In South Florida, it has two Miami-area listings for sale in Pembroke Pines: Goodyear at 8301 Pines Blvd.for $1.65 million and TGI Friday’s at 90 N. University Drive for $3.1 million.

Near Jacksonville, Florida, the firm is listing Petco at 463713 SR 200in Yulee and McDonald’s at 37 Epic St. Augustine.

Original article appeared here.

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