Retail Center Sells for Record Price in Marietta, GA

Matthews™ Agent, Conrad Sarreal, successfully sold a retail property at 789 Church St., Marietta, GA also known as Kennestone Oaks for a remarkable price, securing the second-lowest cap rate for newer 3+ tenant retail strips in the Southeast since January 2023 when interest rates started to dramatically affect pricing in commercial real estate. The property sold at a cap rate of 75 basis points below market comparables according to Costar, highlighting the quality of the asset and Sarreal’s ability to source aggressive buyers in a low-velocity market. This sale involved orchestrating competitive bidding processes, stress testing the underwriting of an institutional buyer, patiently overcoming unorthodox requests of a private buyer, and constantly maintaining control over the whole process to increase the execution rate.

Sale Details

• Total Buildable Square Feet: 8,800
• Final Sale Price: $5,825,000
• Sale Price Per Buildable Square Feet: $661.93
• Sale Date: October 7, 2024

Property Details

The property at 789 Church St. is a multi-tenant retail center with a strong tenant mix, including Piedmont Urgent Care (Georgia’s largest healthcare provider), McAlister’s Deli, and The Poke Company. Its prime location directly across from Wellstar Kennestone Hospital, a top-ranked regional facility, along with its generous leasable size, contributed to its high demand. This type of property offers a rare parking ratio of 9 spaces per 1,000 square feet, roughly double the average for strip centers, particularly in densely populated areas like this one, with over 60,000 residents within a 3-mile radius. Additionally, the property’s elevated position atop a hill enhances visibility to the 65,000 vehicles that pass by daily, further boosting its appeal.

• Full Address: 789 Church St., Marietta GA 30060
• Zoning: Commercial
• Property Type: Retail Strip Center

Context and Key Challenges

The seller, a repeat client of Matthews™, had previously worked with agent Conrad Sarreal on successful transactions, including the sale of an AutoZone in Naples, FL, and a second-generation Sherwin Williams property earlier in 2024. Impressed by the success of these deals, the seller chose Sarreal to represent them once again for the sale of a multi-tenant retail center valued at approximately $6 million. Sarreal earned the opportunity by out-competing larger local brokerage firms, largely due to his confidence in the property’s listing cap rate of 6.00%, a rate that others in the market had doubted.

The main challenge was overcoming market conditions: similar centers were being offered at cap rates between 6.25% and 6.50%, and the property’s cap rate was 100 basis points below the prevailing interest rate. Initially, Sarreal identified an institutional buyer who had acquired similar centers in the past 24 months, unaware that this buyer had previously offered just $5 million for the property before Matthews™ was hired. Through strategic negotiations and creating a competitive bidding environment, Sarreal successfully generated offers near the listing price within a week of marketing.

Approach and Execution

Sarreal qualified the institutional buyer rigorously. He reminded them that they already had the seller’s financials on the property from initial offering. He addressed any known hurdles, communicated that the seller was skeptical of their offer because it was much higher than just months prior, met with them at an ICSC event, asked colleagues if they were reputable buyers, and had multiple candid conversations about their confidence in closing this deal. All signs pointed to a high probability close. The buyer later went through their normal due diligence, evaluating the financials, obtaining updated 3^rd party reports, visiting the property, and interviewing the tenants. However, on the final day of due diligence, buyer asked for a significant re-trade on the price because they underwrote the deal with substantially higher future expenses, reducing the NOI. Despite Sarreal’s week-long efforts to negotiate a fair reduction in the re-trade, the buyer remained firm, insisting on a significantly lower purchase price than initially agreed upon. As a result, the deal fell out of contract, causing a 45-day delay to the sale.

Pivoting to New Opportunities

Instead of letting this setback derail the sale, Sarreal quickly pivoted to find a new buyer, demonstrating adaptability and determination in the face of a significant challenge. After the first deal fell through, Sarreal acted swiftly, reaching out to buyers who had previously lost out in the initial round of offers, as well as others who had expressed interest during the escrow period. Within a week, Sarreal and ownership were reviewing and countering multiple buyers until a new buyer was chosen. This time, Sarreal took extra precautions to vet the buyer thoroughly, obtaining proof of funds early, verifying the quality of the lender involved, ensuring that the buyer’s son had visited the property before the PSA was drafted, and addressing relevant challenges that were uncovered in the previous escrow. Sarreal was working to avoid a second false start at all costs. Furthermore, to prevent further delays, Sarreal also tightened the financing contingency, incorporating achievable loan terms into the PSA draft.

The contributing factor that helped ensure a close here was the constant communication and transparency that Sarreal implemented with the buyer’s broker who was the main representative, handling buyer’s due diligence. Together, they were able to resolve minor requests that seller felt were unnecessary but buyer was adamant about.

Results

Sarreal finalized an offer with the new buyer, a Florida-based investor seeking a property in the Atlanta area within driving distance of his son, at a cap rate that proved to be the second lowest in the Southeast for similar properties. By working closely with the buyer’s broker, Sarreal amicably resolved contentious items and moved towards a successful closing. The buyer plans to manage the property personally to reduce overhead expenses. Additionally, with upcoming rental increases scheduled for each tenant and a limited amount of available space in the surrounding submarket, the property is well-positioned to perform strongly over time.

This transaction showcases Conrad Sarreal’s expertise in managing complex sales, maximizing client value, and overcoming unexpected challenges. His strategic diligence and competitive marketing efforts led to an exceptional outcome for the seller, despite early setbacks. The deal closed at a record-setting cap rate and price, highlighting Matthews™’ ability to create a competitive bidding environment through proactive communication, persistence, and a focus on closing deals. In a market where many agents fail to fully invest their time into their listings, Matthews™’ culture of tenacity and client-focused strategies confirmed to the seller that choosing Sarreal over local competitors was the right decision.

Client Testimonials

Adam L., BAMM Realty: “Working with Conrad was great throughout the transaction process. I’m a big believer in communication during the transaction process, regardless of whether or not there is good news to share. Conrad was always responsive, upfront, and honest with us throughout every step. When challenges arose, he held his ground until the last possible second, protecting our equity. When needed, he quickly found us a replacement buyer. Conrad was very hands-on with every step of the process all the way up until closing to ensure we made it to the finish line. It was helpful to be able to rely on him at all times to communicate with the buyer’s broker, lender and title company to make sure that everyone was staying on top of their obligations so that we could timely close in accordance with the contract.”

Michael S., BAMM Realty: “Conrad took full control of the transaction, making the process smooth and easy for us. His market knowledge helped us set the right price and strategy, and his negotiation skills were crucial in getting the right buyer on board and finalizing the business terms. He was always available when needed and kept everything on track with clear communication. Whenever challenges came up, Conrad knew how to handle them and guided things to a satisfactory resolution. His perseverance and hands-on approach led to a cap rate even better than we’d hoped for, showcasing his dedication to achieving the best outcome.”