WASHINGTON, DC–A local private investor has acquired a retail building in the Mount Pleasant neighborhood for $1.2 million, or $555 per square foot. It is a significant price as it represents a new threshold in a retail sale on a per square foot basis, Greysteel Senior Investment Associate Benjamin Wilson tells GlobeSt.com. Wilson and Max Freedman of the firm's Washington, DC Commercial and Mixed-Use team, brokered the sale.
“This was a pure retail play — the new owner won't develop there or expand,” Wilson says. The ground floor of the two-story building is occupied by a dentist and the top floor is vacant. The building was valued at a pro forma 6 cap rate.
“Most buyers would want a pro forma 8 cap rate, or they would buy it if it was a real 6,” Wilson said. “With a pro forma valuation they would want a discount for the risk.”
There were several reasons why the buyer acquired the building at this price point, Wilson continues. The building is a turn key operation other than the vacant floor. And because Mount Pleasant has a limited supply of commercial real estate and a historically low vacancy rate, it shouldn't be too difficult to lease.
There is not a lot of turnover in Mount Pleasant, Wilson says. “It is a very stable corridor and the businesses have been there for a long time. The residents are a tight knit community and they keep those businesses in business. The owners rarely have a reason to sell.”
WASHINGTON, DC–A local private investor has acquired a retail building in the Mount Pleasant neighborhood for $1.2 million, or $555 per square foot. It is a significant price as it represents a new threshold in a retail sale on a per square foot basis, Greysteel Senior Investment Associate Benjamin Wilson tells GlobeSt.com. Wilson and Max Freedman of the firm's Washington, DC Commercial and Mixed-Use team, brokered the sale.
“This was a pure retail play — the new owner won't develop there or expand,” Wilson says. The ground floor of the two-story building is occupied by a dentist and the top floor is vacant. The building was valued at a pro forma 6 cap rate.
“Most buyers would want a pro forma 8 cap rate, or they would buy it if it was a real 6,” Wilson said. “With a pro forma valuation they would want a discount for the risk.”
There were several reasons why the buyer acquired the building at this price point, Wilson continues. The building is a turn key operation other than the vacant floor. And because Mount Pleasant has a limited supply of commercial real estate and a historically low vacancy rate, it shouldn't be too difficult to lease.
There is not a lot of turnover in Mount Pleasant, Wilson says. “It is a very stable corridor and the businesses have been there for a long time. The residents are a tight knit community and they keep those businesses in business. The owners rarely have a reason to sell.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
