Just Sold: Sherwin-Williams in Gainesville, FL

Ground + Space today announced the sale of a Sherwin-Williams property in Gainesville, Florida. Michael Zimmerman exclusively marketed the property, which sold within two percent of the asking price in a 1031 transaction to an individual investor. This listing garnered multiple offers thanks to the property’s strong corporate guarantee and new construction within the larger Markets West master-planned development.

This property is a prime example of a stable, COVID-safe asset that requires minimal landlord maintenance. The NNN lease features a corporate guarantee and scheduled rental increases within each of the six extension periods. The Sherwin-Williams site has excellent visibility within one of Gainesville’s most densely populated residential districts. Centrally located between Newberry Road and Archer Road, the site has easy access to many nearby national retailers and restaurants, as well as busy Interstate 75.

Gainesville itself serves as the cultural, educational and commercial center of the North Central Florida region. Midway between Miami, Florida and Atlanta, Georgia, Gainesville has become a global business destination, attracting investment from around the world. As the home base for the University of Florida—one of the top research institutions in the nation—the Gainesville region offers numerous business advantages for companies both large and small.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. During these uncertain times, Ground + Space remains dedicated to providing best-in-class services and results to our clients. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. Contact us today to find out more!


Just Sold: SimonMed Imaging in Winter Park, FL

Ground + Space today announced the sale of a SimonMed Imaging property in Winter Park, Florida. Michael Zimmerman exclusively marketed the property, which sold within four percent of the asking price in an all-cash transaction. This listing garnered multiple offers thanks to the property’s strong corporate guarantee and the tenant’s status as one of the fastest-growing national physician practices in the country.

This property is a prime example of a stable, COVID-safe asset that requires no landlord maintenance. The NNN lease features a corporate guarantee, multiple five-year renewal options and scheduled 10 percent rental increases. The in-line concept is adjacent to a Wendy’s location that features a drive-thru lane. (Ground + Space successfully sold this property in an all-cash 1031 transaction in November 2020.) The site is less than one mile from the popular Park Avenue shopping district, the city’s new SunRail station and the Valenica College Winter Park campus.

SimonMed Imaging benefits from its prime location less than five miles from the heart of downtown Orlando, Florida. The city has long been a popular tourist destination, attraction more than 75 million people from around the globe in 2018 alone. Major attractions within easy driving distance from the site include Walt Disney World Resort, Universal Orlando Resort, SeaWorld Orlando and LEGOLAND Florida Resort.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. During these uncertain times, Ground + Space remains dedicated to providing best-in-class services and results to our clients. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. Contact us today to find out more!


Net Lease Market Outlook

After a solid 2019 performance, the net lease industry appears to be headed for continued success in 2020. A combination of low interest rates, changes in the United States tax code and the desire for greater return on investments have caused high demand within the net lease market segment.

Lower Interest Rates, Greater Yields

At the start of 2020, many investors feared interest rates might increase, which would lead to a correction. Instead, interest rates have remained fairly low. Since the cost of capital is lower, buyers are free to invest money into larger deals. With this in mind, many commercial real estate owners are taking this opportunity to sell their smaller assets at superior price points. This, in turn, has created a steady supply of properties for potential buyers.

Slight Slowdown in Retail Development

A decrease in retailer development in certain markets has led to an inevitable slowdown in new retail development since 2016. However, the properties that are being built are extremely desirable for buyers. As always, newly built assets are sold at a premium due in part to their long lease terms and low maintenance costs. In addition to these new construction projects, resale properties have become popular in many markets.

Types of Properties in High Demand

The single tenant net lease (STNL) market has long been viewed as a stable investment vehicle. Guaranteed rents and known financials are just two of the many factors that make net lease assets ideal investments. The most in-demand properties in the STNL sector have a few things in common: these assets are brand-new construction in enviable locales with credit-backed tenants. Additionally, potential buyers prefer properties with Internet-proof tenants.

These preferences have led to the rise in popularity of quick-service restaurants (QSRs) among investors. Most trophy assets in the QSR market feature strong credit tenants whose profits are not hampered by Amazon and other Internet retailers. These lower-priced properties tend to have scheduled rental increases every five years and longer lease terms. Ground + Space currently has a McDonald’s for sale in California, Maryland that is a prime example of an enviable QSR asset. Other popular tenants in the QSR space include Starbucks and Dunkin’ Donuts.

Multi-tenant properties are also in high demand, especially those created via break-up strategies. To put it simply, a break-up strategy involves dividing a property into multiple parcels which can then be independently sold to different investors. This strategy is successful in part because it caters to the needs of a larger field of buyers. More buyers are in need of properties within the $2 million to $5 million range than larger properties with price tags of more than $30 million. The team at Ground + Space have worked with several property owners to facilitate break-up strategy sales of trophy assets in major markets.

About Ground + Space

Interested in maximizing your investment opportunities? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to receive a full evaluation of your commercial real estate assets. We can help you determine whether now is a good time for you to sell your property.


Just Sold: SimonMed Imaging in Orlando, FL

Ground + Space announced today the sale of a SimonMed Imaging in Orlando, Florida. This property is a newly constructed 8,680-square-foot asset situated at a corner location off busy South Orange Avenue. Ground + Space Principal Michael Zimmerman exclusively marketed the property and represented the seller, a North Carolina-based real estate investment company. The property sold to a foreign investor for an attractive cap rate of 6.3 percent.

SimonMed Imaging is one of the largest medical outpatient medical imaging providers and physician radiology practices in the United States. With a history dating back over 30 years, SimonMed Imaging now boasts over 75 locations across the country. The corporate-guaranteed NNN lease offers ease of ownership with no landlord responsibilities. Additionally, the lease features two options to renew, along with scheduled rental increases throughout the base term and option periods. The service-based business yields an added security with an Internet-proof tenancy.

The property is ideally situated near the Sodo Orlando development, which has transformed a former industrial block into a thriving activity center with marquee retailers, luxury apartments, office space and restaurants. In addition, the site is near three major malls—including the Mall at Millenia—that report sales of over $1,000 per square foot. SimonMed Imaging benefits from daily traffic counts in excess of 36,429 and an area daytime population of more than 1.2 million people. Visitors to the SimonMed Imaging site have easy access to Florida’s Turnpike and Interstate 4, along with all the many world-renowned tourist locations in and around Orlando.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. Ground + Space is rooted in more than 20 years of experience aimed at providing the best data, relationships and success rates in the business. Interested in commercial real estate investment? Contact us today to find out more about our current listings!


What is a Sale-Leaseback?

As retailers and commercial real estate property owners look to increase returns on capital investments in an uncertain market, the sale-leaseback option is becoming more popular. So, what exactly is a sale-leaseback, and why is it an enticing option for retailers?

The Basics of a Sale-Leaseback

In a typical sale-leaseback transaction, a property owner (like a chain retailer) sells the real estate used in its business to a separate investor (either private or institutional) while simultaneously leasing that same property from the purchaser. The sale-leaseback transaction can include either or both the land and the improvements, and usually features a triple-net lease arrangement. These transactions also typically accommodate fixed lease payments to provide for amortization of the purchase price over the lease term, options for the seller to renew the lease and, on occasion, an option for the seller to repurchase the property at a future date.

The Benefits of a Sale-Leaseback

There are many advantages to a sale-leaseback for retailers. Gaining capital for things like adding store units or paying off business debt are just some of the many ways a sale-leaseback can provide greater return on investment. With a sale-leaseback, the seller regains use of the capital that went into the purchase of the property. The seller usually receives more cash return with a sale-leaseback transaction than through a conventional mortgage financing plan.

With a sale-leaseback, the seller is often able to structure the initial lease term for a period that meets its needs without having to worry about refinancing, balloon payments, appraisal fees and other substantial costs. For a business looking to expand its footprint, this means there would be little to no need to take out a high-interest loan in order to make improvements or open new locations. Additionally, the seller is in a better position to negotiate rental rates and renewal options at the time of sale with a new property owner. Another bonus: rental payments from the newly established lease are fully tax deductible.

Investing in a Sale-Leaseback

For the investor, a sale-leaseback transaction can offer attractive, steady returns. With a fresh lease in place at the time of the transaction, there is less risk of tenant default. Sale-leaseback transactions also typically result in lower management costs and the associated risks thanks to the longevity of the lease. Depending on the lease term and scheduled rental escalations, the sale-leaseback will likely hedge against any future inflation. Additionally, the investor can now capture any future appreciation in the real estate asset.

Things to Consider

Although a sale-leaseback transaction might at first seem advantageous, it’s important to understand both the benefits and the potential risks of such a transaction. Changes in accounting rules or tax reforms can affect the way income from a sale-leaseback transaction is reflected on a company’s balance sheet. However, the demand for single-tenant properties typically sold via sale-leaseback is on the rise. Lower cap rate trends are driving the market and could result in increased sale-leaseback activity.

Are you interested in selling commercial real estate assets? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. The team at Ground + Space works to analyze current market data to offer clients best-in-class service. Contact us today to learn more about how a sale-leaseback transaction could benefit your business strategy.


Just Sold: Cary Multi-Tenant Strip in Cary, NC

Ground + Space announced today the sale of the Cary Multi-Tenant Strip in Cary, North Carolina. This property is a 9,788-square-foot multi-tenant asset that features three tenants: Sleep Number, Zoës Kitchen and PM Pediatrics. Ground + Space Principal Michael Zimmerman exclusively marketed the property and represented the seller, a Florida-based commercial real estate development company. The property sold for a superior cap rate of 6.11 percent.

This multi-tenant property is a prominent outparcel to Target and Home Depot. The site is positioned at the heart of a dynamic retail trade area in Cary, North Carolina. Each NNN lease features a corporate guaranty, two options to renew and scheduled rental increases of 10 percent. The leases also provide for ease of ownership with minimal landlord responsibilities.

With more than 40,000 cars passing the site daily, the property benefits from its highly visible location along Walnut Street. The multi-tenant site sits within an affluent community of more than 160,000 residents and has access to more than two million Triangle area residents. The site has easy access to Interstate 440 thanks to its position between the state capitol of Raleigh, North Carolina and the renowned Research Triangle Park (RTP).

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. Ground + Space is rooted in more than 20 years of experience aimed at providing the best data, relationships and success rates in the business. Interested in commercial real estate investment? Contact us today to find out more about our current listings!


4 Reasons Why NNN Properties Are Ideal Investments

A triple net (NNN) lease is an increasingly popular form of a rental agreement between tenants and landlords or investors for commercial real estate. Though a majority of the financial responsibilities fall on the tenant, NNN leases are still heavily favored and preferred, even when compared to other variations of net lease agreements. NNN leases present several benefits to tenants and investors alike, which makes them ideal opportunities for the new or seasoned investor. Below are four reasons to consider investing in NNN lease properties.

NNN Lease Properties Require Minimal Management

A NNN lease puts almost all of the financial burden in the hands of the tenant. By definition, NNN leases require very little management from the investor, as the tenant is responsible for the agreed upon rent as well as the property insurance, property taxes and property maintenance.

This simplicity and lack of financial obligation is beneficial for investors, but these terms also provide a sense of control to the tenants. Occupants do not need to wait weeks on general property maintenance from an overwhelmed landlord and enjoy the greater autonomy offered by a NNN agreement.  

NNN Lease Properties are Favored by Reliable Tenants

NNN lease properties are often chosen by secure, reliable tenants, as they are aware of the responsibilities they incur. Tenants that favor NNN lease properties frequently include retailers such as gas stations, mattress outlets, fast-food restaurants, convenience stores and grocery stores.

Multi-tenant property sets prefer NNN leases because the rents tend to be lower. Additionally, with the responsibility of property insurance, taxes and maintenance, the business owners have the incentive to keep costs low. These types of tenants allow investors to comfortably offload the burden of the additional property expenses while maintaining a dependable and steady source of income.

NNN Lease Properties are Stable Investments

The stability and predictability of NNN investments are appealing for both parties entering the agreement. The structure of a NNN lease is known from the outset, and the entities that prefer NNN leases provide predictable sustainability and accountability for the well-being of the property itself. Additionally, the typical occupants of a NNN property are often impervious to the effects of the rise of e-commerce, which facilitates long-term rental agreements and builds quality relationships between tenants and landlords.

NNN Lease Properties Diversify an Investment Portfolio

NNN leases are integral components of any sophisticated investment portfolio. These types of properties are typically low-risk and tend to deliver passive, steady income with little to no management required. A long-term, stable, but potentially lucrative asset into a portfolio allows an investor to achieve an imperative balance dynamic. Additionally, acquiring a NNN leased property provides an investor with the ability to focus on other high-risk, hands-on investments. These attributes of a NNN lease property simplify the process of investment portfolio diversification, which is essential to avoiding market fluctuations.

Interested in commercial real estate investment? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!


The Difference Between NNN Leases and Absolute Net Leases

In commercial real estate, several types of leases accommodate a range of different economic responsibilities between the tenant and investor. These leases include single, double or triple net (NNN) leases; percentage leases; gross leases; modified gross leases; pass through leases and absolute net leases.  When investing in commercial property, it’s important to have proper expectations before signing any type of lease. NNN leases are often confused with absolute net leases and making a discernible distinction is integral to understanding your commercial real estate investment and responsibilities.

What is a NNN lease?

In a NNN lease, the tenant is responsible for taxes, insurance, and general building maintenance, and the landlord or investor is removed from almost all of the financial obligations. However, the roof and structure of the property are not traditionally included in the tenant’s list of maintenance responsibilities. NNN leases are typically longer-term for commercial real estate properties and have initial terms that begin at 10 years or more. Accordingly, NNN leases are very popular as they provide multiple benefits for both tenants and investors.  

What is an absolute net lease?

In an absolute net lease, sometimes called a bondable lease, the tenant is responsible for rent and all other property related expenses, which includes roof and structure. This agreement completely relieves the property owner or investor of all financial obligations. An absolute net lease is a variation of the NNN lease that is commonly used when the investor has borrowed money to finance the commercial property and opts to put additional risks in the hands of the tenant.

Why are NNN leases and absolute net leases often confused?

The confusion between NNN leases and absolute net leases often initiates from an inaccurately advertised NNN lease, or a misunderstanding of the different leases on either the investor’s or the tenant’s behalf. When a property is advertised as a NNN lease, the investor may make the purchase under the assumption that all expenses are the tenant’s responsibility and unintentionally incur a massive financial expenditure in the future. In another scenario, and because ”NNN lease” is a more popular phrase than “absolute net lease,” the property may be listed as a NNN lease when the terms describe an absolute net lease. This risks blindsiding the tenant later on with a hefty roof or structural repair bill.

What are the best ways to avoid confusion between NNN leases and absolute net leases?

Investors and tenants can avoid confusion between NNN leases and absolute net leases by performing ample research on the different types of leases. The parties involved must also be well-versed in both the particulars and the fine print of a lease before signing. Additionally, commercial real estate brokerages offer expertise and information on all different types of agreements and investments. To maximize the returns of a commercial property investment, it’s always best to consult professionals.

Interested in commercial real estate investment? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!


Single Tenant Net Leases Versus Multi-Tenant Net Leases: Which Is a Better Investment?

Commercial real estate presents investment opportunity in a variety of formats. Investors typically decide between either a single tenant net lease property or a multi-tenant net lease property. As both types of investment opportunities offer several pros and cons, preference is often circumstantial. Below is an in-depth analysis and comparison—read on to enhance your understanding of single and multi-tenant net leases.

What are single and multi-tenant net leases?

A single tenant net lease is a rental agreement between the sole occupant of a one-unit space and its owner or landlord. A multi-tenant net lease is a rental agreement between several occupants or renters in a larger, multiple-office property. Net leases require the tenants to assume responsibility for some or all of the additional costs associated with a commercial property on top of the agreed-upon rent. Accordingly, net leases are popular types of rental agreements in commercial real estate, as they benefit both the tenants and the landlords. Different forms of net leases, such as single, double or triple net leases, entrust the occupants with incrementally increasing responsibilities, which gives landlords and tenants an array of choices for various scenarios.

Single Tenant Net Lease: Pros and Cons

Single tenant net lease properties are often appealing to first-time investors because of their simplicity. With only one tenant to attend to, the management requirements are far less demanding. Single tenant net leases also typically average between 10-20 year terms, which is advantageous for long-term budgeting and planning. Additionally, single tenant commercial real estate agreements are very often designed as triple net leases, which almost entirely alleviate the landlords of property obligations.

However, investing in a single tenant property relies heavily on the quality of the sole tenant. If the occupant’s business fails or encounters financial trouble, the investor’s primary source of income is significantly limited if not eliminated. A completely vacant property has a detrimental impact on a commercial investment. Aside from losses associated with the vacancy itself, upkeep, improvements, insurance and other affiliated costs begin to diminish overall return rates until a new tenant is found.

Multi-tenant Net Lease: Pros and Cons

As multi-tenant net leases rely on a multitude of occupants, the likelihood of total vacancy is very low. Multi-tenant net leases typically average seven years, which leaves room for relatively frequent adjustments. Additionally, investors lean toward a multi-tenant property because they prefer to close on several units at once instead of several individual endeavors. This approach is often perceived as more efficient and more economical, as it reduces transactional closing fees and procedures.

Contrarily, a multi-tenant property also signifies increased duties and responsibilities. Multiple occupants require more active management due to specialized, individual needs. Furthermore, these properties are often considered a higher-risk investment, as they are more susceptible to significant value loss during an economic downturn and also require periodic capital contribution for maintenance or improvements. These risk factors combined with the typically higher turnover rate of multi-tenant property occupants result in higher interest rates from lenders.  

Interested in commercial real estate investment? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!


The Need-to-Know Considerations of a Triple Net Lease Investment

A triple net lease, often called a net-net-net (NNN) lease, is a commercial real estate agreement in which the tenant agrees to cover the net real estate taxes, building insurance, and maintenance fees in addition to the agreed-upon rent. Every triple net lease is different, however, and typically has unique scenarios and parameters. Accordingly, an investor, landlord or tenant must perform a thorough assessment of the agreement before proceeding. Below are the most applicable considerations regarding triple net lease investments.

Unit Economics

Unit economics outline the direct revenue and cost associated with the business model within the space. A proper unit-economics assessment enables the investor to determine the relative likelihood of lease renewal as well as predict potential profits. The type of tenant and operational expectations will greatly affect the unit economics, and thus the parameters and considerations of the NNN lease. A Starbucks has different operational expectations than a Mattress Firm, for example, and may want to negotiate a different NNN lease structure. Unit economics analyses are also helpful in comparisons between similar or neighboring locations.

Tenant Quality

Tenant quality in commercial real estate refers to the expected reliability, character and performance of an occupant. Low-risk tenants are typically favorable, primarily because NNN leases often involve single-tenant properties. An investor cannot risk the possibility of losing all forms of cash flow to cover expenses if a high-risk tenant fails and declares bankruptcy. High-risk tenants, however, offer the potential for higher cap rates and higher cash-on-cash returns, and different investors may prefer different levels of risk.

Rent and Term Length

Long-term triple net leases provide stability and longevity, but an investor must pay careful attention to ensure adequate stipulations and predetermined rent raises to account for inflation. Neglecting to account for the gradual decrease in the value of the dollar can cut into profit margins or offset them entirely, depending on the length of the NNN lease. Additionally, triple net leases can include renewal options, which provide investors, landlords and tenants with a viable alternative to a long-term contract. Triple net leases with renewal options are worth considering for less-proven business models.

Early Termination

An early termination clause gives the tenant the ability to sever ties before the lease term is completed and results in a severe risk of cash flow loss in an investment. A tenant is typically required to give ample notice of early termination accompanied by a lump sum payment.

Co-tenancy

A co-tenancy clause is a provision of a retail NNN lease agreement that specifies terms for the potentialities of neighboring businesses. Co-tenancy clauses offer the tenant some form of protection against a major competitor moving next door, or if an anchoring, adjacent business ceases operation or relocates. These types of scenarios can result in a significant change in consumer traffic and tenants may negotiate a co-tenancy clause as a precaution.

Interested in commercial real estate investment? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!