By Meghan Hall
Retail assets continue to trade despite the pandemic, but the assets attracting the most attention are often single-tenant buildings home to essential businesses and grocery stores. In a transaction that closed on December 8th but only recently recorded, Carlsbad, Calif.-based Merlone Geier Partners sold off an Edmonds retail property for $23.5 million. The buyer was Boise, Idaho-based WinCo, who also leases the property.
The property is located at 21900 Highway 99. According to Snohomish County parcel data, the entire site includes 8.28 acres of land. The building on the property was originally constructed in 1992 and totals about 86,000 square feet.
Merlone Geier focuses exclusively on retail and retail-driven mixed-use properties along the West Coast. The firm typically targets acquisitions in in-fill, primary markets, as well as surplus real estate in need of repositioning. According to its website, Merlone Geier targets investments with a $10 million minimum and seeks core-plus and value-add opportunities.
WinCo, founded in 1967 and initially known as “Waremart Foods”, operates more than 125 grocery stores across Washington, Idaho, Nevada, California, Oregon, Arizona, Montana and Utah. Many of the company’s stores average about 90,000 square feet and operate 24 hours per day.
Cap rates for single-tenant properties such as WinCo’s latest buy remain unimpacted, particularly for tenants deemed essential throughout COVID-19. However, across the region, investment activity has slowed throughout 2020, according to Kidder Mathews. In the 3rd quarter, there were 29 sales of retail properties of $2 million or more. Like WinCo, three were owner-user purchases. Of 36 investor purchases, 30 were single-tenant sales that had at least eight years remaining on the lease term.