CORONA DEL MAR, Calif. – Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the company closed out the first half of 2022 with a record number of both sales volume and number of transactions. Many of the transactions closed at record pricing and record-low cap rates. The company also launched a new website — www.hanleyinvestment.com — in the first half of 2022 with the continued goal of improving user experience and ease of access to all available listings.
“Even with the recent spike in interest rates, single-tenant absolute triple-net investments and multi-tenant retail pads leased to national credit tenants have continued to trade with the most velocity due to the security and stability of income they can provide, compared to other retail product types in the marketplace,” said Ed Hanley, president of Hanley Investment Group.
Hanley continues, “We are helping owners be very strategic about valuing and selling their properties. We are also executing more pre-sales and break-up sale plays.”
In the first half of 2021, 1,892 retail transactions (over $1 million) with an average cap rate of 6.27% were completed in the U.S., compared to 1,763 transactions with an average cap rate of 5.85% in the first half of 2022, representing a 6.82% decrease in transaction volume from the previous year and a 42-basis-point decrease in the average cap rate, according to CoStar.
Hanley Investment Group completed 88 deals totaling over $451 million and 1,178,110 square feet of retail in 18 different states in the first half of 2022. In the first half of last year, Hanley Investment Group completed 82 retail transactions totaling nearly $361 million, which is a 7.31% increase in the number of retail transactions in 2022 compared to 2021 and a 24.93% increase in sales volume over the previous year.
Some of the recent transactions include:
Hanley Investment Group procured two individual 1031 exchange buyers for the sale of a separately parceled shopping center anchored by a high-performing Petco in Bend, Oregon. By selling the parcels separately rather than the shopping center as a whole, Hanley Investment Group realized $1,500,000 in additional value for the seller.
In Kern County, California, Hanley Investment Group procured four individual buyers for the sale of four single-tenant net-leased investments at a newly developed Grocery Outlet-anchored shopping center in the unincorporated community of Rosamond, achieving record pricing for each of the properties.
Earlier this year, Hanley Investment Group completed the sale of the fourth retail pad building at the newly developed Monterey Crossingin Palm Desert, California. The sale of a 2021-new construction, single-tenant The Habit Burger Grill Drive-Thru at the newly developed Monterey Crossing shopping center brings Hanley’s total sales at Monterey Crossing to a combined 17,060 square feet and approximately $20.3 million. Previous sales included two brand new, single-tenant ground leased pads to Chick-fil-A Drive-Thru and Quick Quack Car Wash, along with a two-tenant pad building occupied by AT&T and Spectrum. All four properties were sold to four separate buyers at record-low cap rates.
Hanley Investment Group anticipates seeing more shopping center owners implementing a break-up-sale strategy to capitalize on the high demand for single-tenant and multi-tenant retail pad product. In 2021, Hanley Investment Group executed a break-up-sale strategy at nine major shopping centers in the U.S. and expects to bring more single-tenant and multi-tenant pad properties to the market in 2022 as a result of implementing break-up sale strategies at multiple large shopping centers.
The demand for single-tenant net-leased grocery stores has remained strong. Hanley Investment Group recently arranged the sales of four Grocery Outlet stores in California, all at sub-5% cap rate prices. Hanley Investment Group also generated 16 qualified offers for a Cardenas Markets in San Bernardino, California and secured a Southern California-based 1031 exchange buyer late in their identification period who exceeded the asking price and closed escrow at a record-low cap rate for a single-tenant Cardenas Markets in the U.S.
“As an essential business and daily-needs tenant, single-tenant grocery investments have remained one of the most sought-after retail assets in this market. Investors see a flight to safety and security in the grocery sector, especially with a value grocery retailer like Grocery Outlet,” Hanley said.
Hanley Investment Group is seeing continued demand for single-tenant car washes as buyers looked to take advantage of the bonus tax depreciation benefits. According to Hanley Investment Group’s Executive Vice President Jeff Lefko, there are over 700 express car washes under construction across the U.S.; industry experts estimate that even with all of these locations set to open, there is still a need for more new construction sites. Not only have cap rates compressed, but car wash business values/multiples are at an all-time high, especially for tenants that have scale; in many cases, the business is now worth the same if not more than the real estate, which is something that you don’t always see in net-leased real estate, Lefko noted.
“Express car washes continue to be the most profitable tenant in the net-lease sector; with profit margins between 50% to 60%, the average location can withstand major economic hardship. In certain markets, top-performing car washes are taking big box space and becoming quasi ‘anchors’ to shopping centers. These washes can bring tens of thousands of cars to the center each year,” Lefko reported.
“Though car wash ground leases don’t offer depreciation benefits, they are still attractive for investors because they require such a substantial capital investment from the tenant,” Lefko continues. “The guaranty on the lease becomes secondary when a tenant is spending upwards of $3 million in improvements to lease a prime site. The bonus depreciation phase-out that begins in 2023 should create a major increase in demand towards Q3 and Q4 of 2022 as investors try to lock in 100% bonus depreciation before it decreases.” Hanley Investment Group closed 18 single-tenant car wash properties in Q4 2021 and has 16 more sold or in escrow in the first half of 2022, many at record-low cap rates.
QUICK SERVICE RESTAURANTS
The demand for single-tenant net-leased retail investments occupied by a successful national credit quick-service restaurant with a drive-thru continues to remain strong. Hanley Investment Group, in association with Progressive Real Estate Partners, recently procured an all-cash 1031 exchange buyer that closed at 100% of the asking price shortly after KFC opened for business and started paying rent. Located in Perris, California, the closing cap rate represented a record-low cap rate for a single-tenant KFC in the Inland Empire.
Hanley Investment Group arranged the sale of a new construction, single-tenant Starbucks Drive-Thru with a café in Mojave, California, for $4,560,000. The property is located along Highway 14, just past the Highway 58 interchange in southeastern Kern County. Millions of tourists pass through Mojave annually en route to vacation destinations Mammoth Mountain (2.5 million annual visitors), Yosemite National Park (4 million annual visitors), and Death Valley National Park (1.6 million annual visitors). Hanley Investment Group procured multiple qualified offers and created a competitive bidding environment to achieve maximum market pricing, said Hanley Investment Group’s Executive Vice President Bill Asher.
Asher continues, “We procured an all-cash, 1031 exchange buyer in the final weeks of their identification period and opened escrow before the store opened for business.” The sale represented record pricing for a new Starbucks priced above $4 million in the Central Valley region of California.
In North Kansas City, Missouri, Hanley Investment Group, in association with ParaSell, Inc., arranged the sale of a new construction, single-tenant Starbucks Drive-Thru. Hanley Investment Group procured multiple all-cash offers within the first two weeks of marketing the property for sale and closed escrow at 100% of the list price.
Hanley Investment Group is a market leader in the sale of Starbucks investments in the U.S. and has sold or has in escrow 57 Starbucks properties in the last 48 months.
CHILD CARE / LEARNING CENTERS
Hanley Investment Group has completed the sale (or has in escrow) $70 million in single-tenant learning and childcare-leased properties across the country over the last 12 months. The properties are leased to Kiddie Academy, The Learning Experience and O2B Kids! ranging from one-unit operators to large corporate guarantees.
“Compared to most net-lease categories, childcare properties have vastly different valuations that are primarily influenced by the geographic submarket more than the credit of the tenant,” Lefko said. “Even with the cap rate compression we saw in Q1 2022, childcare-leased properties in certain markets offer an attractive, above-average return for investors that seek to secure positive leverage financing. Strong unit-level enrollment is one of the most significant metrics for childcare properties with franchisee credit. On average, a childcare operator’s breakeven point is between 60 and 80 students for a standard 10,000-square-foot building.”
Earlier this year, Hanley Investment Group completed the sale of a new construction, single-tenant net-leased retail property occupied by The Learning Experience at the Lucky supermarket-anchored shopping center located in Solano County in Northern California. The sale price was $5,250,000.
“Hanley Investment Group was retained to market the property for sale after it had been on the market for nine months with limited activity,” said Lefko. “Within the first three days of marketing the property to our extensive investor database, we generated multiple, strong offers and secured a California-based private investor that closed at 99.5% of the asking price.”
Hanley Investment Group arranged the full-price sale of a two-tenant, 11,400-square-foot retail center in Zionsville, Indiana, an affluent Indianapolis suburb. Hanley Investment Group generated six offers in the first 10 days of marketing, before selecting a full-price offer from a local Indianapolis investor, noted Hanley Investment Group’s Vice President Dylan Mallory. The sale price was $3,145,000.
Hanley Investment Group arranged the sales of three multi-tenant retail properties in Chicagoland to three out-of-state private investors in separate transactions. The combined value of the three separate transactions totaled more than $10 million and 76,357 square feet. “Investors were attracted to these investment opportunities due to the low price per square foot,” noted Mallory. “The properties sold at an average of $132 per square foot, significantly below their replacement cost. Many investors are seeking shelter in similar types of retail assets that cannot be built for the same costs in today’s inflationary market.”
Hanley Investment Group brokered the sale of Colonial Square, a 41,238-square-foot multi-tenant retail strip center in Bakersfield, California. The sale price was $10.1 million. “We generated eight qualified offers in the first week of marketing the property and created a competitive bidding environment to achieve maximum market pricing,” said Asher. “We procured a private investor in a 1031 exchange who obtained financing and closed escrow in 45 days at $165,000 over the asking price.”
“Even with more forecasted interest rate increases this year, continued stock market volatility and staggering inflation, real estate investors are looking for a safe haven for their capital,” said Ed Hanley. “We expect that single-tenant and multi-tenant net-leased properties occupied by national and regional credit tenants will continue to be in demand.”
In the first half of 2022, Hanley Investment Group was nationally recognized in several awards programs. GlobeSt. Real Estate Forum featured the company as a top Influencer in Retail Real Estate; Hanley Investment Group’s Jeff Lefko was recognized as one of the industry’s top 50 Under 40; and Hanley Investment Group’s Chief Operations Officer Tiffanie Farr received honors in the Women of Influence awards program. Hanley Investment Group’s Ed Hanley, Bill Asher and Jeff Lefko received Crexi’s Platinum Broker Award; and CoStar awarded Hanley Investment Group with its annual Top Power Broker award and a first quarter deal award.
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a real estate brokerage and advisory services company with over a $9.3 billion transaction track record that specializes in the sale of retail properties nationwide. Our expertise, proven track record, and unwavering dedication to putting clients’ needs first set us apart in the industry. Hanley Investment Group creates value by delivering exceptional results through the use of property-specific marketing strategies, cutting-edge technology, and local market knowledge. Our nationwide relationships with investors, developers, institutions, franchisees, brokers, and 1031 exchange buyers are unparalleled in the industry, translating into maximum exposure and pricing for each property. With unmatched service, Hanley Investment Group has redefined the experience of selling retail investment properties.
For more information, visit www.hanleyinvestment.com.
Company Name: Hanley Investment Group Real Estate Advisors
Contact Person: Loan Nguyen, Marketing Manager
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Address:3500 E. Coast Highway, Suite 100
City: Corona del Mar
Country: United States