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!

Why Drugstore Chains are Still a Good Investment

Drugstore industry giants like CVS and Walgreens are rethinking their expansion plans. Changing consumer shopping habits, tightened pharmacy reimbursement rates and increased tariffs on Chinese products are just a few of the factors drugstore retailers cite for the slowdown in new store development.

Changing Retailer Strategies

CVS Health announced in early August its plans to slow annual store expansion for the next two years as it makes changes to its business model and focuses on delivering high financial returns for investors. The company is set to open only about 100 stores in 2019—just one-third of its typical volume—and only 50 new stores in 2020. The company also plans to shutter 46 underperforming stores and reevaluate nearly 500 annual lease renewals.

Walgreens Boots Alliance is scheduled to close at least 200 stores across the United States as it begins to implement a new cost-management program aimed at cutting operating costs by $1.5 billion by 2022. In 2018, Walgreens added 1,932 Rite Aid stores and distribution centers to its portfolio for $4.4 billion. As of August 2019, the company has more than 500 surplus properties for sale.

The Future of Drugstore Retailers

Like most retailers, CVS and Walgreens are reacting to a change in consumer spending and shopping habits. As the e-commerce industry continues to boom, both CVS and Walgreens plan to invest in experiential retail solutions to attract and retain customers. CVS plans to roll out 1,500 HealthHUB store formats by the end of 2021. The additional 20 percent of floor space dedicated to health services will include everything from on-demand health kiosks to space for yoga classes. Walgreens is doing much the same as it adjusts its business model to place more emphasis on merchandise like beauty products and health equipment. The company also plans to expand its Partners in Primary Care centers within retail stores which offer specialized services for seniors with Medicare Advantage health care plans.

What Does This Mean for Investors?

In the grand scheme of things, these store closings and the scaling back of future development is insignificant. Those impacted most will be current owners of drugstore properties. In the wake of these announcements by CVS and Walgreens, some owners will need to find new tenants and face the possibility of having to accept less rent. (After all, banks and drugstores tend to pay higher-than-average market rental prices.)

With a dwindling stock of new properties on the market, the biggest challenge for brokers going forward will be selling properties with shorter lease terms. However, drugstore properties are still in high demand. Steady cap rate trends, strong corporate guarantees and minimal landlord responsibilities all factor into the success of drugstore transactions.

Interested in investing in a drugstore property? 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!

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!