Broker who sold Tampa shopping center: 'If I had 10 more, I could sell 10 more in the next month'
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Mar 4, 2015

The sale of a nearly 30-year-old shopping center off West Hillsborough Avenue demonstrates the incredible investor demand for retail properties in Tampa Bay. A team of retail brokers from Cushman & Wakefield of Florida Inc. - Jane Levin, Patrick Berman and Jason Donald - represented a group led by Tampa investor Daniel Pepper in the sale of Bay Plaza Shopping Center, a strip mall at the intersection of West Hillsborough Avenue and Sheldon Road.

Miami-based ATS Investment Inc. paid $4.2 million for the 38,842-square-foot center in a deal that closed Feb. 26. The center is 97.5 percent leased.

Berman said there were 50 inquiries and 14 offers on the property, which will generate about a 9 percent capitalization rate for the buyer. Cap rates measure an investor's rate of return on a property, dividing potential returns by the purchase price. Higher purchase prices result in lower caps rates.

That type of return, combined with almost no new construction in the region, is driving investor interest in retail properties, Berman said. By contrast, investors who buy Walgreens Co. stores - widely regarded as safe, passive real estate investments - can expect about a 6 percent cap rate.

"There's huge demand for these deals," he said. "If I had 10 more, I could sell 10 more in the next month."

The businesses that occupy Bay Plaza - service retail, including a nail salon, barber shop and pharmacy, plus sushi and Mexican restaurants - aren't national credit tenants, which increase the value of a center and lower the risk of owning it.

But even with mostly local operators in the center, it's still a low-risk deal. Several have been in the location for 10 to 15 years, Berman said.

"It's low-risk, high yield," he said. "It's not going to be on the cover of Fortune magazine, but you'll certainly collect rent every month."

Ashley Gurbal Kritzer is a reporter for the Tampa Bay Business Journal.