Complex fully occupied, yet sells at post-recession discount
COURTESY / CBRE|The Boulos Company
The 15,700-square-foot retail complex at 209 Western Ave., in South Portland.
SOUTH PORTLAND— A building that in 2006 sold for $4.6 million, a year after it was built, has now been resold for substantially less.
REJ I LLC sold 209 Western Ave. — a 15,700-square-foot retail complex on 1.68 acres— to Raphael LP for $3.2 million. The deal, brokered by Greg Boulos and Vince Ciampi of CBRE|The Boulos Company, closed March 18.
The complex is fully occupied and tenants include Pom’s Thai Restaurant, North Atlantic Montessori School, Moe’s Original BBQ, Long Board Shop, Modern Nails, Snip-its and Miracle Ear. It has parking for 86 cars.
It’s in close proximity to I-295, the Maine Turnpike, Portland International Jetport and the Maine Mall has good visibility on Western Avenue.
So why the price drop?
Recovery from the recession has just been slower for businesses in Portland’s suburbs, said Ciampi, who represented the seller, a Maine resident who had personal reasons for selling the property.
“He bought that building before the recession,” said Ciampi. “It was a great building — and still is a great building. And, at the time, it was a good purchase price. But the rental market now is different than it was before the crash. All of the markets got hit by the financial crisis. But as we’ve seen rents come back and businesses come back, the center of that has been downtown Portland. For retail, office, multi-family — everything — downtown Portland, as far as Maine goes, has been the center of that comeback.”
The further you get from Portland, the market has been slower, Ciampi said.
“It really had an impact on the rental rates. And with an investment property, the rental rates are what drive the purchase price. You’re starting to see suburban mall areas pick up a bit, but it’s been sluggish compared with Portland,” Ciampi added.
The buyers consider it a good investment that helps them fulfill a 1031 exchange, said Boulos, their representative in the deal. Under the Internal Revenue Service tax code’s Section 1031, sellers of a commercial real estate asset can defer payment of a capital gain and instead utilize that gain to trade into another commercial asset.
In this case, the buyer of 209 Western Ave., Raphael LP, had just sold a three-acre South Portland parcel, at 264 Gorham Road, which is leased by Bugaboo Creek Steakhouse. The partnership consists of two sisters, one living in Florida and the other in Italy, who were both born and raised in the Portland area. The three acres had been owned by their father, who passed away a number of years ago. Boulos used to handle the father’s real estate, so when the sisters needed help, they called him.
“They wanted to diversify, so they hired us to sell the three-acre parcel, which was income property because it was leased to Bugaboo Creek,” Boulos said. “With Bugaboo Creek, they had a great asset, but it was leased to just one tenant. So they swapped into a multi-tenanted property, which allowed them to diversify their risk over a number of tenants.”
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