Newmark Knight Frank (“NKF”) has arranged the sale of a Target-occupied building in Phoenix for a total of $20.3 million.

NKF Net Lease Capital Markets Executive Managing Director Matt Berres and Director Samer Khalil, in cooperation with Managing Director David Guido, represented the seller, an affiliate of Menin Development, Inc., and procured the unnamed institutional buyer.

The single-tenant property is located at 1625 Camelback Road within a strong infill, urban location adjacent to Arizona State Route 51. This location is Target’s first small footprint store in AZ, which opened in July of 2017. The building totals 50,428 square feet and presented the buyer with a long-term net lease with fixed rental increases.

“Properties with investment grade tenants and long-term triple-net leases in desirable locations are commanding premium pricing in line with, or exceeding, pre-pandemic levels due to the dearth of inventory available,” said Berres. “This tenant checked all the boxes as an ideal net lease investment and traded at a record low cap rate for single-tenant net leased retail properties ($10M+) in Arizona over the past five years.”

Khalil added, “With the tenant owning most of its real estate, the pricing and deal terms were reflective of the rare opportunity to acquire a long-term net leased Target anywhere in the country, let alone in a prime Phoenix MSA location.”

Berres and his team have been extremely active as of late with five properties sold in the past two weeks and another 15 in escrow, further confirming that “essential” tenants, strong credit, long-term passive lease structures and quality underlying real estate fundamentals are at the top of net lease investors’ wish lists during the pandemic.

Berres noted, “Grocery, drug stores, convenience stores and medical retail are among the most sought-after tenancies for investors and lenders alike.”

The resiliency of Phoenix’s retail market fundamentals can be attributed to continued nation-leading population growth, according to NKF Research. Despite public health restrictions due to the pandemic, retail sales in Phoenix surged 7.5% in June propelled by automobile, apparel and electronic sales. While a few multi-tenant properties traded hands, the top sales this quarter were dominated by long-term, single-tenant triple-net lease assets.