Overall investment sales volume was down prior to the pandemic. Nonetheless, we are continuing to see pad site sales, net investment sales and some smaller center sales fueled by low interest rates and investors seeking returns in a difficult investment environment. However, overall market activity and larger project sales have been limited. The uncertainty both with regard to the viability of tenants and the unknown length of the pandemic have created a difficult environment for investors to navigate. There is a belief that capitalization rates will rise in general and that there will be opportunities to pick up distressed assets. There is money available in the market for acquisitions, both debt and equity, and several distressed asset funds have been started. The magnitude of any rise in cap rates or the number of distressed properties is anybody’s guess at this point. Much depends on the length of the pandemic and the number of tenant closures.
Sales Volume Drops
Most sales so far this year took place in the first quarter. These transactions were primarily smallish neighborhood and strip centers with the exception of Mayfair Village. Mercer Street Holdings ONE, LLC had originally purchased the loan on the property and acquired direct ownership in November 2018 by foreclosure. After acquiring, they sold off two pad sites, CVS & Aldi, then packaged the remaining property to sell to a developer for repositioning. Mayfair Village has a long and storied history in northwest Oklahoma City, sitting at the south end of the city's original shopping corridor along May Avenue. The Buyer, Precor Ruffin, is in the process of remodeling the center and converting many of the existing buildings to pad sites. The one second quarter sale was the Sprouts anchored sale of Greenbriar Square in south Oklahoma City for $10.7 million. This sale is notable given that its new construction, quality tenants and the $289 per square foot price tag.