By Jon Peterson
As neighborhood suburban retail properties continue to gain steam, some owners are looking to test the appetite of the market. A private capital owner based in Connecticut is one of these owners, and the company is looking to sell the 49,990 square-foot retail property it owns in Santa Rosa located at 2222 and 2226 Cleveland Avenue. The asking price on the property is $18.5 million, or roughly $370 per square foot, according to the property’s offering document.
The seller is looking to sell the property with the assistance of the San Francisco office of Cushman & Wakefield. The team working on the sale includes Don LeBuhn and Dan Wald, both executive managing directors with the company.
If the sales price is attained, the transaction would produce a cap rate of 6.4 percent, as stated in the asset’s offering document. This return would be based on the property’s current net operating income of $1.2 million. The current ownership has held title to the asset since December of 2017 when it paid $16.4 million for the buildings.
The two addresses for the properties each have their own single tenants. The property at 2222 Cleveland is 100 percent leased to office supply and retail giant Staples. This tenant recently signed a new 10-year lease for the space it occupies, which will not expire until the end of September 2032. 2226 Cleveland is fully occupied by TJ Maxx. This tenant has a lease that runs to the end of October 2027.
The asset does have a parking operation for a total of 200 surface parking stalls, and the total land area for the property totals 3.73 acres.
The retail asset is likely to be acquired by another private capital type of buyer, according to industry sources. The next owner could be attracted to the property by the strong current income that the property is providing.
The two buildings that are up for sale are located next door to a vacant space formerly occupied by Orchard Supply Hardware. This property is not up for sale, since the lease on this property is guaranteed by Lowe’s and this company is still paying rent to the current property owner.
The Staples and TJ Maxx stores are both located near a major regional mall in the area known as Coddingtown Shopping Center Mall. This center is anchored by Sears, Target and Whole Foods, and it helps with the foot traffic that the two buildings up for sale see on a regular basis. In addition, the retail properties up for sale are located in an area that is unlikely to see any future retail development in the near future.