CHICAGO—In April, GlobeSt.com reported that the cap rates for single-tenant net-leased properties were at historic lows. And that market now looks especially good for banks. The Boulder Group just completed the sale of a single-tenant Fifth Third Bank located at 240 Skokie Boulevard in suburban Northbrook for $3,925,000, and officials from the brokerage firm say they will probably sign a lot of similar deals throughout the year.
“Banks have become the hottest part of the net-lease sector,” says Randy Blankstein, president of The Boulder Group. Although the market for other retail outlets remains healthy, “the difference is that the credit ratings of banks are much stronger and banks are typically in better [than average] demographic areas like Northbrook,” an affluent suburb with above average household incomes.
Furthermore, many banks have leases that run much longer than those for other retailers. Some last up to 25 years, Blankstein adds, and have built-in rental escalations. “They're kind of unique that way.” This Fifth Third had a lease with fifteen years remaining at the time of sale and included multiple rent escalations. The property was first developed in 2004.
Fifth Third Bank occupies the entire 4,100-square-foot building. It sits on a 1.17-acre parcel along Skokie Boulevard, less than a mile from Northbrook Court, a regional mall anchored by Neiman Marcus, Macy's and AMC Theaters. The site experiences traffic volumes in excess of 21,000 vehicles per day.
Blankstein and Jimmy Goodman, also of The Boulder Group, represented both buyer and seller in the transaction. The seller was a Midwest-based private partnership and the buyer was an East Coast-based 1031 Exchange investor.
And Blankstein believes this particular market niche will grow more appealing. A lot of people who own shopping centers, he says, recognize that it now makes economic sense to sell off disconnected parcels, sites frequently occupied by banks that use them to provide drive-thru services. “I'm expecting a lot more bank transactions by the end of the year.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
