November Capital / August 6, 2021
As net lease real estate investors are well aware, demand for Florida assets is at an all time high. Investors have flocked to quality Florida investment properties and have normalized the practice of offering hundreds of thousands if not millions over asking prices.
Over the last year, Dollar General has been a sweetheart target for 1031 exchange buyers looking for the ultimate coupon clipper. Because of their relatively low price points, passive leases calling for no landlord maintenance obligations and strong credit, 1031 exchange dollars have caused new construction Dollar General cap rates to compress to all time lows.
According to CoStar, over the last 12 months, new construction Dollar General stores in Florida have sold at 97% of asking price on average.
Over the last 12 months, there have been 26 new construction Dollar General sales in the state of Florida. According to Costar, the average new construction Dollar General in Florida has sold at 97% of listing price in 2021.
The aforementioned 26 transactions account for $50.5M in sales volume, an average sale price of about $2M per property. Additionally, new construction Florida Dollar General assets have moved extremely quickly averaging 4.9 months from listing to closing.
Among the 26 new construction Dollar General transactions in Florida that have traded over the last year, average sale cap rate was 5.70%. That’s a 40 basis point decrease compared to the previous 12 months. So far in 2021, the lowest cap rate Dollar General trade was 5.10% and highest cap rate deal closed at a 6.30%. Cap rates should continue to compress as we approach year end.