TUCSON, Arizona – With only a few recording days left in Q1 and despite interest rate hikes, Tucson retail sales volume has trended up 70.3% over the same period last year, with nine more transactions year-over-year, according to RED Comps’ tracking of all retail sales in the market.
The average retail sales price saw a 29% increase while the median sale price jumped 102% from the same period in 2016.
Interest rate increases in 2017 are expected to have an effect on cap rates and volume many are predicting, with some experts such as Real Capital Analytics forecasting the contrary saying the current flat cap rate environment will continue. Metro Tucson retail cap rates have certainly risen, on average a 60 bps increase from 6.25% to 6.85% year-over-year. In this environment, sources say to watch for the effects interest rate increases will have on both deal volume and cap rate.
The main contributing factor for the increase in cap rates for the retail sector can be attributed to the rise of Treasury rates which is at 2.41% today.
Looking for solid investment opportunity, it was several 401K Pension plans from Nogales Arizona that recently purchased a 5,840-square-foot retail PAD at the west end of Lee Lee Plaza Shopping Center, 2080 W. Orange Grove Road in Tucson, for $1.86 million ($318 PSF).
The property is 100% occupied by 3 tenants: Ole' Mexican Grill, a local Sonoran style Mexican food restaurant that has been in the building since it was built in 2001, Goodwill of Southern Arizona, Southern Arizona' s leading second-hand retail store chain with over 40 retail stores and donation stations, and a family owned Domino' s Pizza franchisee that owns all of the Southern Arizona Domino' s stores.
Property sold with attractive yearly rent escalations to all three Triple Net Leases.
John Yarborough and David Carrol of Romano Real Estate handled the transaction. The buyer was 2080 Orange Grove LLC of Nogales, Arizona (Robert Charles Milo, Jr., member) an investment group comprised of several family owned, 401K Profit Sharing Plans. The seller was an affiliate of Black Lion Investment Group of Los Angeles, CA (Robert Rivani, member)
Located in a grocery anchored shopping center, Lee Lee International Supermarket, the property sits on a 1.18-acre pad at the northeast corner of Orange Grove Road and La Cholla Blvd. in the northwest submarket of Tucson. The property is approximately 3 miles east of Interstate 10 on Orange Grove Road and one mile south of the Foothills Mall. It is located just across Orange Grove Rd. from the Northwest Medical Center, a 300-bed full-service acute care hospital.
For more information, Yarborough and Carroll should be reached at 520.577.1000 ext. 7177.
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[mepr-show rules="58038"]Property sold 3/22/2017 with a 2017 NOI of $143,447.47 and a 7.7% cap rate with escalations every year.[/mepr-show]