A real estate firm bought the Walgreens on Mechanicsville Turnpike for more than $10 million last month. Photo by Burl Rolett.
As behemoth grocery stores shoot up all over the Richmond area, the hottest retail investments – at least over the last several weeks – are stores of a smaller sort.
Out-of-town investors paid a combined $15 million to buy a pair of local Walgreens stores in two separate July deals.
The larger of the two was for the Walgreens at the corner of the Mechanicsville Turnpike and Lee Davis Road in Hanover County. Pinak Mehta LLC and Nikki Mehta LLC bought the building from an Illinois-based firm for $10.5 million.
County city records list the property at 14,470 square feet. That’s $725 per square foot, assuming all the space is rentable.
“It’s a good, safe investment with little risk,” said Craige Pelouze, a broker who handled the deal on behalf of the buyer. “Walgreens is a gigantic company with $80 billion dollars in sales a year, they have 8,000-plus stores.”
Walgreens lists its 2013 net revenue as $72.2 billion and has 8,125 stores.
The Mechanicsville Walgreens was built in 2011, and Walgreens signed on for a 20-year lease, Pelouze said. It’s a triple-net lease, so the tenant covers the building’s operational costs like utilities, landscaping and other upkeep.
Another Walgreens at 11300 Nuckols Road sold on July 22. San Francisco-based Flair Diversified Properties bought that 12-year-old pharmacy and convenience store from the San Francisco Flower Growers Association for $5.82 million. The store is 13,000 square feet.
Buyers’ willingness to pay premium prices for long-term, single-tenant buildings is a trend that has recently spanned the retail, industrial and office markets.
In June, Lingerfelt Cos. sold a T-Mobile office building in Short Pump for more than $17 million. Company principal Ryan Lingerfelt said the demand in the market for similar net-leased properties drove the eight-figure price.
The two largest real estate sales in the city of Richmond in 2013 were single-tenant, net-leased office properties. The Virginia Urology Center at Stony Point sold to a New York-based REIT for $19.2 million, and the Meadwestvaco’s downtown headquarters fetched $143 million, or about $461 per square foot.
And local real estate firm Capital Square Advisors bought a CVS pharmacy store on the Las Vegas Strip last year. The company specializes in buying up single-tenant properties and then selling ownership stakes in the buildings to 1031 Exchange investors.
On the industrial side, Chesterfield’s Amazon fulfillment center – 1 million square feet of warehouse space leased entirely to the internet retail giant – sold for $81 million last year.
“When one of these comes up for sale, it’s a bidding war,” Pelouze said. “There’s very strong demand and dwindling supply.”
A real estate firm bought the Walgreens on Mechanicsville Turnpike for more than $10 million last month. Photo by Burl Rolett.
As behemoth grocery stores shoot up all over the Richmond area, the hottest retail investments – at least over the last several weeks – are stores of a smaller sort.
Out-of-town investors paid a combined $15 million to buy a pair of local Walgreens stores in two separate July deals.
The larger of the two was for the Walgreens at the corner of the Mechanicsville Turnpike and Lee Davis Road in Hanover County. Pinak Mehta LLC and Nikki Mehta LLC bought the building from an Illinois-based firm for $10.5 million.
County city records list the property at 14,470 square feet. That’s $725 per square foot, assuming all the space is rentable.
“It’s a good, safe investment with little risk,” said Craige Pelouze, a broker who handled the deal on behalf of the buyer. “Walgreens is a gigantic company with $80 billion dollars in sales a year, they have 8,000-plus stores.”
Walgreens lists its 2013 net revenue as $72.2 billion and has 8,125 stores.
The Mechanicsville Walgreens was built in 2011, and Walgreens signed on for a 20-year lease, Pelouze said. It’s a triple-net lease, so the tenant covers the building’s operational costs like utilities, landscaping and other upkeep.
Another Walgreens at 11300 Nuckols Road sold on July 22. San Francisco-based Flair Diversified Properties bought that 12-year-old pharmacy and convenience store from the San Francisco Flower Growers Association for $5.82 million. The store is 13,000 square feet.
Buyers’ willingness to pay premium prices for long-term, single-tenant buildings is a trend that has recently spanned the retail, industrial and office markets.
In June, Lingerfelt Cos. sold a T-Mobile office building in Short Pump for more than $17 million. Company principal Ryan Lingerfelt said the demand in the market for similar net-leased properties drove the eight-figure price.
The two largest real estate sales in the city of Richmond in 2013 were single-tenant, net-leased office properties. The Virginia Urology Center at Stony Point sold to a New York-based REIT for $19.2 million, and the Meadwestvaco’s downtown headquarters fetched $143 million, or about $461 per square foot.
And local real estate firm Capital Square Advisors bought a CVS pharmacy store on the Las Vegas Strip last year. The company specializes in buying up single-tenant properties and then selling ownership stakes in the buildings to 1031 Exchange investors.
On the industrial side, Chesterfield’s Amazon fulfillment center – 1 million square feet of warehouse space leased entirely to the internet retail giant – sold for $81 million last year.
“When one of these comes up for sale, it’s a bidding war,” Pelouze said. “There’s very strong demand and dwindling supply.”