CHICAGO—Few single-tenant net leased properties are more attractive to buyers than investment-grade auto parts stores, and properties here frequently bring in out-of-town investors. The Boulder Group, for example, an investment brokerage firm in Northbrook, IL, has just completed the sale of a net leased O'Reilly Auto Parts store located at 854 Summit St. in suburban Elgin for $2,500,000 to a West Coast investor.
As reported in GlobeSt.com, a report published earlier this year by Boulder found that cap rates in the auto parts store sector compressed from the fourth quarter of 2012 to the fourth quarter of 2013 by 31 bps. A limited supply of investment grade assets has helped push the rates down.
“The current uncertainty in the dollar store sector has led some investors to look at different types of net lease properties including auto parts stores, which often feature long-term leases to investment-grade tenants with rental escalations,” says Randy Blankstein, president of Boulder.
The 7,616-square-foot retail building in Elgin was constructed in 2008 along Summit, a primary east-west thoroughfare. Over 21,000 people live within one mile of the property. In addition, over 185,000 people within a five-mile radius have an average annual household income of at least $80,000. The property benefits from its location adjacent to a shopping center anchored by a Jewel-Osco grocery. Furthermore, O'Reilly has over eight years remaining on the lease, which also features 10% rental escalations every five years.
Blankstein and Jimmy Goodman, a partner of Boulder, represented the seller in the transaction; a private individual based in the Midwest. The purchaser was a West Coast-based private investor in a 1031 exchange.
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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.
