Poplar Bluff retail space sells for $2M

A pair of Poplar Bluff retail spaces have sold to a New Jersey buyer for just over $2 million.

Hanley Investment Group Real Estate Advisors, a national real estate brokerage and advisory firm specializing in retail property sales, has announced the firm has completed the sale of two, two-tenant retail properties occupied by a Starbucks Drive-Thru. The sales represent record pricing, according to a press release.

Hanley Investment Group’s Executive Vice Presidents Jeff Lefko, along with Hanley Investment Group’s Associate Dylan Mallory, arranged the sale of a new construction, 3,750-square-foot retail pad building at 1337-1339 N. Westwood Blvd. in Poplar Bluff, situated as an outparcel to Mansion Mall. The two-tenant building, built in 2018 on 0.68 acres, is leased to Starbucks with a drive-thru and a large authorized Verizon retailer.

Mallory and Lefko represented the seller, a private investor local to Poplar Bluff. The buyer, a private investor from New Jersey, was represented by Craig Dunkle of Marcus & Millichap of Philadelphia.

The sale price was $2,046,000, representing a cap rate of 6.45%, company officials said.

“There were four qualified offers generated within the first 30 days of marketing the property,” said Mallory. “We procured a private East Coast buyer and closed at 96% of the list price. Investors were attracted to this offering because it is the only Starbucks drive-thru in an 80-mile radius and the Verizon store was a seasoned operator who relocated from a nearby shopping center.”

Lefko adds, “As the main north/south thoroughfare for Poplar Bluff, Westwood Boulevard features a variety of national retailers including Walmart Supercenter, Home Depot, Hobby Lobby, ULTA Beauty, Marshalls, Petco, Big Lots, Harbor Freight and ALDI.”

“We are seeing an increased buyer demand for two-tenant assets with national credit tenants, which is putting downward pressure on cap rates,” said Lefko. “The cap-rate spread between two-tenant properties and single-tenant net-leased properties is narrowing to an all-time low. This is especially true when Starbucks is one of the two tenants in the offering.”

Mallory adds, “As a net-leased passive investment, Starbucks provides investors with a high level of confidence and security that requires little to no maintenance. Furthermore, the stores are situated in high-traffic locations with strong demographics, which is extremely appealing to investors long-term.”

According to CoStar, there were 22 two-tenant pad sales in the Midwest in 2019 at an average cap rate of 6.95%, which shows a 5-basis point compression from the 7.00% average cap rate in 2018, Lefko notes.

“Buyer demand for this product type has increased for a few reasons,” Mallory explained. “Buyers continue to want to diversify their income stream by having two separate tenants. They also like getting a higher return versus a single-tenant property. Additionally, single-tenant Starbucks leases have very similar landlord responsibilities to the two-tenant leases and thus buyers are going to have similar minimal maintenance responsibilities whether they buy a single-tenant Starbucks or a two-tenant Starbucks property.

“A lot of buyers have the attitude that they might as well buy the two-tenant property with essentially the same amount of work but at a higher cap rate and a more diversified income stream. In the case of (the) Poplar Bluff properties, Starbucks’ rent was low relative to most new construction Starbucks properties, which increased the buyer demand.”

A new construction, 5,646-square-foot retail pad building leased to Starbucks with a drive-thru and Aspen Dental in Spring Hill, Tennessee was also sold. The sale price was $3,621,000, representing a cap rate of 5.95%.