Leasing has picked up in neighborhood shopping centers and now, buyer interest is starting to follow.
In New Haven, a 32,300-square-foot shopping center on Foxon Boulevard just northeast of downtown has sold for $7.5 million, or about $230 a square foot — well above the prices paid for similar shopping centers just a year ago, according to Edward Jordan, managing director of Northeast Private Client Group, which represented both the buyer and seller.
Jordan told me the sale of a similar shopping center in Stratford a year ago fetched $2.9 million, or $115 a square foot.
“Clearly, in the last 12 months, there is more appetite and competition for assets that are well tenanted,” Jordan told me. “And since January, there is much more activity on properties brought to market.”
Jordan stressed that buyers are mostly targeting recently-developed shopping centers that boast strong tenant rosters. The center on Foxon Boulevard is now 90-percent leased and was developed by Krypac Development LLC beginning in 2007. Aldi Supermarkets purchased a portion of the 8.5-acre site in 2008 for a 16,700-square-foot grocery store.
Buyer Longford Associates of White Plains, N.Y. was attracted by long-term leases with T-Mobile, TD Bank and AutoZone, Jordan told me.
While financing can still remain a challenge in buying neighborhood strip shopping centers, stronger tenant rosters are helping to bring deals together, Jordan told me.
Real estate experts say much of the leasing is still confined to smaller tenants who are taking advantage of more attractive leasing terms.
It could be a couple of years before the big box stores become active in leasing and even then, they are likely to target smaller blocks of space, as they battle for a larger share of online sales.
For stores and restaurants seeking 2,000 to 6,000 square feet, there are deals to be had because lease rates have come down in the recession. That’s a boon to smaller retailers that have thinner profit margins.
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