Situation
Beginning in 2021 and continuing through 2022, the used car industry experienced an unusual and challenging obstacle. Covid-related supply chain disruptions — in particular, a global shortage of semiconductor chips used in cars, trucks and SUVs — forced automakers to limit their production of new vehicles. That, in turn, triggered a surge in used-vehicle demand and prices. While the situation posed a great disruption to carmakers, retailers, and consumers, it also led to a unique real estate opportunity.
Challenges
MAX 22, LLC, owner of a ground lease of a CarMax Auto Superstore located within the Indianapolis submarket of Keystone Crossing in the city of Carmel, Indiana, recognized the momentum of the industry and decided to strategically sell at that time. The Osborne team represented the Seller in the transaction.
Results
The CarMax Auto Superstore, located at 9750 North Gray Road in Carmel, Indiana, totaled approximately 55,536 square feet, featuring an extensive campus with the main building showroom, a customer receiving bay, a service/repair shop with 17 hydraulic automatic lift bays, and a second building used for auto cleaning that houses an automated car washing system and a fuel dispenser. While most of the Osborne team activity occurs within the greater Sacramento area, the team was able to strategically work with a local Carmel broker at Colliers International Indiana. Collectively, the team was able to source a seasoned Buyer, Realty Income Corporation (NYSE: O), a real estate investment trust that invests in free-standing, single-tenant commercial properties, who was well-versed in this product type. The single-tenant, triple-net ground lease of a CarMax Auto Superstore ultimately sold for $29 million in July 2022.
