Calif.-based buyer acquires Thornton Walgreens-leased bldg.
A retail property leased to Walgreens in Thornton sold for $6.13 million.
California-based private capital investor Washington Street Holdings LLC purchased the 14,406-square-foot Walgreens-leased retail property at 8799 Washington St. from seller GMS Thornton LLC. Drew Isaac and James Rassenfoss of Marcus & Millichap were transaction brokers in the sale.
According to Rassenfoss, the property was a build-to-suit development for Walgreens, constructed in 2003, and the seller has owned it since. Walgreens operates under a long-term, absolute triple-net lease. The retailer has seven years remaining on its primary term with 10 five-year renewal options. The property traded as part of the buyer’s 1031 exchange.
Listed in fall 2019, the property saw significant buyer interest, Rassenfoss said. The sale closed in mid-June with no COVID-19 related delays.
“Over the past few months, we have experienced an increase in demand for Walgreens properties. Across the board, more 1031 exchange clients are opting to go in this direction due to the ‘essential business’ aspect of Walgreens,” Rassenfoss said. “Even as more retailers start to reopen, there is still uptick in interest for pharmacy and essential-needs retailers, and we believe that cap rates will continue to compress across the board given the security and NNN nature of these deals.”
“The deal flow of net-leased properties during the pandemic has surprised market participants,” Isaac added. “We’re not experiencing a drop in transaction volume.”
Rassenfoss expects the interest in essential net-leased properties to continue for the foreseeable future.
“I think people will continue picking up essential goods at these locations, bumping up the sales numbers and making these locations more desirable for investors,” Rassenfoss said. “In the long term, tenants such as Walgreens or Dollar General, that have shown success during this economic downturn, will stick out to investors.”
Located just a block from Interstate 25 on a double-signalized corner adjacent to a Walmart-anchored shopping center, Rassenfoss said this location was especially desirable. The property also is within walking distance of multiple Regional Transportation District bus stops, several residential properties and Thornton High School.
According to Rassenfoss, this is the buyer’s first Colorado property. It owns similar retail properties across California, Arizona and Nevada.
Published in the July 15-Aug. 4, 2020, issue of CREJ.