JUPITER, FL–With Sports Authority closing its stores, its Jupiter location on West Indiantown Road in South Florida was ideal for retail. And a grocery store was interested. So was Home Depot. But sell or lease?
“In order to ensure we had a strong, well thought out strategy for the client, our team conducted a comprehensive analysis of the asset that examined timing and costs to lease the property versus selling it,” Patrick R. Luther tells GlobeSt.com. “With rising construction costs, it proved more favorable for the landlord to simply sell to Home Depot.”
Luther, executive vice president of SRS National Net Lease Group, says the sale was a case study of the company’s approach to add value.
“This transaction is a perfect case study as to SRS’ capability to add value for our owner, developer and investor clients by approaching capital market activities and disposition efforts in conjunction with a tenant-focused regional approach,” said Luther. “In this case, SRS was originally tasked with re-tenanting the property for the out of state investor/developer to then sell it as an occupied net leased investment. But, after further analysis, best pricing and terms came from the sale to an owner-user sourced by our tenant/landlord representation team in Florida.”
SRS Real Estate Partners’ National Net Lease Group in conjunction with SRS’ Florida tenant and landlord representation team completed the $8.1 million sale of the vacant, freestanding, 38,000-square-foot retail building in Jupiter. The property was formerly occupied by Sports Authority and will be redeveloped by the buyer, Home Depot U.S.A. for use as an expansion and redevelopment of the Home Depot store currently on the site.
SRS’ National Net Lease Group Managing Principals Matthew Mousavi and Patrick Luther, Executive Vice President John Artope of SRS’ Orlando office and Senior Vice President Michael Weiss of SRS’ South Florida office represented the seller, Indiantown Road, LLC. Home Depot was represented by Corporate Property Dispositions and The Rotella Group, Inc.
Strong Interest From Big and Junior Box Users in South Florida
Located at 1560 W. Indiantown Road, the former Sports Authority property had only been vacant for a brief period before SRS was able to generate interest from multiple tenants and users. The property benefits from neighboring tenants such as Walgreens, PetSmart, Winn Dixie and Pep Boys.
The asset is within a densely populated area with more than 67,000 people within a three-mile radius and more than 46,000 vehicles passing the site on a daily basis.
Luther says SRS approaches all assignments by combining leasing analysis to best influence a capital event – refinancing or a sale. In this case, local SRS leasing experts were given the leasing assignment, with an emphasis on sourcing a credit tenant which would command a low capitalization rate and strong value at the sale.
“SRS had a significant amount of interest from prospective tenants and we were initially in talks with a potential grocery store. Our tenant rep team also had a relationship with Home Depot, currently occupying a successful but smaller box next door. After further negotiation, Home Depot expressed an interest in expanding its existing location via a purchase versus a lease of the space,” he says.
SRS’ National Net Lease Group completed in excess of 270 sales in 2017; so far this year, the group has more than 240 transactions sold or under contract across over 30 states throughout the country and currently has $1.2 billion in assets currently listed for sale.