Landlords are juicing more profits from their top properties by selling off outparcels. Some buyers want to add multitenant properties, freestanding restaurants and even residential and hospitality. Other buyers just want to own property in high-traffic areas with strong national co-tenants.
What are outparcels? Also called outlots and pads, they’re buildings or plots of land separate from the main property. They’re often located on the fringes and usually reserved for later phases of development or for sale to raise money. They can house freestanding buildings in parking lots of malls or can be lots reserved for construction of smaller buildings within larger complexes.
What’s the appeal of outparcels to tenants? For one thing, they offer customers more access points for drive-thrus, walkup windows and other convenient services.
Malls Are Monetizing Empty Parking Spaces
PREIT, for example, signed a deal in May to sell 11 outparcels at its properties for $32.5 million. Another REIT, Washington Prime Group, is offloading outparcels, too. Raymour & Flanigan purchased the outparcel building it was leasing from the REIT at its Whitehall Mall in Pennsylvania for $7.5 million. The four-acre parcel includes the 61,000 square-foot building and the parking lot in front. Before the furniture retailer moved in around 2012, Borders and Famous Footwear shared the property.
Power Center Outparcels Also Are in Demand
A 12,380-square-foot outparcel at Kimco Realty’s 580,000-square-foot Crossroads Plaza power center in Cary, North Carolina, sold for $10 million in a 1031 exchange. Moran Capital sold the property, a two-acre former Bob Evans converted into a multitenant center, to Maxem Cary LLC. Tenants include America’s Best Contacts & Eyeglasses, BurgerFi, Cava and Heaven Foot Spa Nails Lounge. The buyer plans to operate the property as is.
Three retail outparcels at California’s 214,000-square-foot Palmdale Marketplace traded for a combined $10.2 million: a 5,958-square-foot property occupied by Jamba, Baskin Robbins and Harbour Sushi; a 4,875-square-foot building occupied by Five Guys and Cafe Rio; and a 4,022-square-foot building occupied by IHOP. A private investor bought the first two parcels, and IHOP purchased its own building. SRS National Net Lease Group represented the buyers, as well as the seller, a Texas-based owner and operator of retail properties.
And at St. Cloud Commons in Kissimmee, Florida, First Watch, Pollo Campero, Mattress Firm, Deca Dental and Zaxby’s are moving into four outparcel buildings recently sold to developer MHW. Katz & Associates represented the seller, a private owner.
Outparcels at Supermarket-Anchored Properties, Too
In Palm Desert, California, a private investor paid $5 million to Sage Investco for a 7,000-square-foot outparcel in a Walmart Neighborhood Market parking lot. It’s leased to Club Champion and Mattress Firm. Hanley Investment Group represented the buyer and seller. In Florida, Banyan Development and Pebb Enterprises sold an outparcel at the Sprouts Farmers Market-anchored Main Street at Boynton for $9.5 million. It’s leased to fuel station operator Wawa.