Three Single-Tenant Property Sales Net $100M in L.A.

Single-tenant retail properties are continued to command strong pricing. Newmark recently brokered the sales of three single-tenant retail properties in the Los Angeles area for a total of $100 million. A Home Depot, an Amazon Fresh facility and a Chick-Fil-A were the three properties to trade hands in separate transactions.

Decron Properties sold the single-tenant Home Depot, an 111,624-square-foot property at 5040 San Fernando Road in Glendale, for $61.8 million to Charing Cross Partners. The property includes a 94,530-square-foot retail building and an attached outdoor garden area totaling 17,094 square feet. The property comes with flexible zoning that could allow the new ownership to pursue multifamily or another alternative use in the future.

Red Mountain Retail Group sold the remaining two assets, an Amazon Fresh facility and a Chick-Fil-A. The 29,456-square-foot Amazon Fresh property is located at 6855 La Cienega Boulevard in Los Angeles. A private family office purchased the property for $35 million. The 4,000-square-foot Chick-Fil-A is located at 6801 La Cienega Boulevard in Los Angeles. A private investor purchased the asset for $13.7 million.

Although retail was somewhat destabilized by the pandemic, single-tenant properties have performed well, especially those occupied by both Internet and pandemic-resilient tenants, as in the three transactions here. According to research from Colliers, reliable cash flow and longer lease terms have kept capital flooding into the single-tenant net lease sector. Since the start of the pandemic, retail has accounted for 20% of all investment in the single-tenant net lease space. Currently, STNL retail volume is pushing back toward pre-pandemic levels, with Q2 2021 volume ringing in at $4.1 billion. Drug store pricing is strongest within that sector—and is outperforming the broader retail market.

This year, the Hanley Investment Group has had record-breaking single-tenant retail transactions, and the firm expects cap rates to compress this year. In an earlier interview, Ed Hanley, president of Hanley Investment Group said, “We expect that the supply of new construction retail properties will remain low and overall cap rates will continue to compress for strong credit single-tenant net lease quick-service restaurants with drive-thrus, grocery stores, auto-related properties, convenience stores and medical.”

Newmark vice chairman Bill Bauman, executive managing director Kyle Miller and associate director Matt Schwartz represented the seller of the above transactions. Kevin Held at Cushman and Wakefield represented the buyer in the Amazon deal.