MINNEAPOLIS—Single tenant net leased properties are less available in the Twin Cities, and this, combined with the general affluence of the region and the strength of its real estate markets, has investors ready to snap up offered properties. For example, the Boulder Group, a net leased investment brokerage firm in suburban Chicago, has just completed the sale of a single tenant Chuck E. Cheese's ground lease located at 445 Commerce Dr. in Woodbury, MN, a suburb of St. Paul, for $2,280,701.
“People like both the area and the long-term nature of these leases,” John Feeney, senior research analyst with Boulder, tells GlobeSt.com. CEC has fifteen years remaining on their lease that features 10% rental escalations every five years, another attractive feature for investors.
The US Bureau of Labor Statistics tags the market's unemployment rate at just 4.3%, the lowest among the largest US metropolitan areas. And the Urban Land Institute recently published its Emerging Trends in Real Estate 2014, and found that Minneapolis ranked 20th among US metropolitan areas in overall real estate prospects, and 9th for its development prospects.
CEC occupies the entire 15,762-square-foot retail building. It was newly constructed on a 2.34 acre parcel in a retail corridor across the street from a Sam's Club-anchored center.
“Getting a building that is new construction and has a 15-year lease is rare,” Randy Blankstein, president of Boulder, tells GlobeSt.com. Even though the local economy is vibrant, “you don't see as much product of this type as you do in other cities,” which increases the competition and drives up prices.
The CEC is located adjacent to a SuperTarget and will be the most recent addition to the Commerce Hill Shopping Center which also features a McDonald's, Bruegger's Bagels, European Wax, Great Clips, and CorTrust Bank. It is less than one mile from an I- 94 interchange.
Blankstein and Jimmy Goodman, a Boulder partner, represented the seller in the transaction. The seller was a Midwest-based developer and the buyer was a private investor from the West Coast.
Goodman adds that “passive investors are purchasing ground leases as a potential inflationary hedge, as most ground leases provide rental escalations throughout the lease term.”
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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.
