Kupiszewski

2349 North Monroe Street

Stan Kupiszewski asked me to prepare a quick analysis of the Walgreens Site on North Monroe Street in Tallahassee, Florida. This is by no means a property appraisal, rather just some thoughts that I have about the property value. I spoke with a few friends of mine who are very active in retail real estate (ownership, development, and sales) to formulate this summary.

In an attempt to provide the information that I believe you are seeking, I have prepared this page as a lightening-quick overview of the property and its potential value at market. Most likely, you could order a $3000 appraisal to get a 100 page analysis that will tell you the same thing :).

Income Approach

Long term lease with Walgreens. One could do a simple NPV analysis on the lease to determine an income-based value of the property. Currently, with the state of the real estate market in decline, this would be viewed with skepticism and an expectation that Walgreens will not be renewing the lease. Thus, this form of valuation is not highly accurate for determining a real sales value.

Cost Approach

A cost approach determination of value would likely yield an improvement value no less than $110 per square foot, and the "elephant in the room" will be the value of the land. Currently, there are far more sellers than buyers in most commercial real estate markets, and Tallahassee is no different. Additionally, the unknown status of the future of the Tallahassee Mall, adjacent to the subject property, will create a "wait and see" response from the market.

Comparable Sales

Ultimately, I think the highest and best use of this property prohibits a tear-down for re-development. The discussions that I had with my pears makes me fairly confident that the best value received with be from a single or multi-use retail owner. There are very few organizations in Tallahassee that need 15,000 square feet, so the multi-tenant owner/occupant will be the top dollar possible.

Our general consensus that even at liquidation pricing, this site should yield no less than $800,000. Our feeling was a land value in the $1M to $1.5M range, and thus an as-is value of $2M to $2.5M is realistic, if a buyer can be found.

The scarcity of money has left the investment market with just cash-strong bottom feeders. This is no market to be trying to sell an asset at top dollar, as values have dropped substantially. The solution for a sale would require an extended lease with Walgreens or another similar, top rated tenant. We also considered extended stay hotels, restaurants, and office-supply stores as good targets to approach for selling.

A good comparable property happens to be one that I had ownership and sold in October (1500 Miccosukee Road in table below). The land was premium grade, contiguous with Tallahassee Memorial Hospital. It contained an old school house and church, but the property was purchased for redevelopment by the hospital. Without them as a buyer, there were no other real suitors.

I have provided a list of every commercial transaction on retail and raw land that has occurred in Leon County since January 2010. I have restricted the list to properties between 1 and 2 acres in order to give you a feel of what has sold (I omitted quit-claims at negligible dollar amounts). Again, no real analysis here, I'm just providing some data from the market place.

If I can provide any further information, please do not hesitate to contact me through this simple form [link to form].

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