Why SoBe Walgreens may be worth $78.89 million

A $78.89 million listing for the 19,000-square-foot Walgreens store on the ground floor of the Ritz-Carlton Hotel on South Beach indicates eye popping prices aren’t over for Lincoln Road.

This listing is especially interesting because it’s a long-term leasehold interest with over 100 years remaining on the ground lease. The buyer also shouldn’t expect Walgreens to depart so it can be replaced by a trendy luxury retailer who will pay more in rent.

“This flagship Walgreens is one of the retailer’s top-performing Southeast locations,” said Simon Jonna, senior managing director investments in Marcus & Millichap’s Detroit office. Simon  and Raymond Jonna are representing the seller, a private Miami-based developer. Ryan Nee, first vice president and regional manager of Marcus & Millichap’s Fort Lauderdale office, is the firm’s broker of record in Florida.

“Walgreens is committed to an absolute net lease that has over 21 years remaining on the base term and includes 10 five-year options with rare 10 percent rent increases every 10 years, including option periods,” Simon Jonna said in a press release. “The current rent is well below market-rate. The property’s irreplaceable urban-core location puts it in an excellent position to grow with rents and inflation for generations to come.”

The location is about as prime as it gets in South Florida. In addition to being underneath the Ritz, it’s on the corner of Collins Avenue and adjacent to the Lincoln Road Mall. Luxury hotels nearby include the Lowes Miami Beach, Delano South Beach, SLS South Beach, and Hyatt Centric.

Jeremy Larkin, co-chairman of NAI Miami Commercial Real Estate Services Worldwide, likes the site in the heart of tourist land, calling it a “100 percent location.”

So, who might be willing to pay somewhere near $78.89 million? A buyer with a long-term horizon, Larkin says. “If you are an opportunistic buyer, a flipper in three of five years, it’s a horrible deal.”

The property could be attractive to a high net worth investor looking for preservation of capital, Larkin says.  One challenge for that class of investor is finding something that can safely generate 5 or 6 percent returns. Although the base terms of the lease are for 21 years, those 10 percent increases would kick in over the 10 year-periods.

That’s why the right buyer might be willing to pay more than what a typical market price would be, he says.

You May Also Like
BE BOLD Leadership Campaign Raises $415 Million to Help Strengthen Broward’s Future

The Community Foundation of Broward’s BE BOLD Leadership Campaign has secured the funding to address the county’s most pressing challenges, ensuring long-term philanthropic impact through bold giving.

Read More
Parkland 17 Memorial Foundation Unveils Design for Students Lost in MSD Tragedy

The official public memorial is moving forward with artist Gordon Huether’s design.

Read More
The Dating Game

What’s it like for South Florida singles seeking meaningful connections in middle age? With perseverance and a sense of humor, love can be found.

Read More
Faces of Change

These six philanthropists are leading the charge to change the world, and not just by writing a check.

Read More
Other Posts
Strategic Investment Helps Drives Growth for Miami-Based No Days Off Premium Water

The brand is currently planning for 2025
launches in retailers across the Southeast as it continues to grow distribution.

Read More
No Days Off
Dine Like a True VIP at Sushi by Bou Wynwood

The restaurant has over 20 locations in the U.S.

Read More
Sushi-by-Bou
A Luxurious Waterfront Estate Awaits in Venetian Isles

The residence in the prestigious Lighthouse Point community is listed for $4.5 million.

Read More
The Art of a Champion

The company is a national leader.

Read More
Champion Specialty Service