Mobs of investors are fighting over properties anchored by big supermarket chains such as Harris Teeter, Kroger and Publix, leading those seeking less competition to focus on shopping centers anchored by specialty grocers, such as Earth Fare, Sprouts Farmers Market, The Fresh Market, Trader Joe’s and Whole Foods.
According to Franklin Street Retail Investment Advisors, 51 specialty-grocery-anchored U.S. shopping centers have traded hands in the past two years, accounting for an aggregate $1.3 billion, double the amount sold in 2012.
About 80 percent of last year’s specialty-grocery-anchored properties were single-asset deals, according to Gary Saykaly, senior director at Franklin Street. Of the 10 transactions that were part of a larger portfolio sale, most consisted of entity-level transactions or the buyout of a partnership interest. Fresh Market was the most popular specialty supermarket among traded properties last year, accounting for 37 percent of the total, Saykaly reports. Whole Foods made up 28 percent of the deals, Trader Joe's 22 percent, Earth Fare 12 percent and Sprouts 2 percent. Whole Foods properties garnered the lowest cap rates: at 4.9 to 5.4 percent.
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