163-20 CROSS BAY BOULEVARD

INVESTMENT HIGHLIGHTS

• The Property – Developed in 2009, this 9,800 SF retail building sits on a 33,000 SF lot with 180 feet of frontage along Cross Bay Blvd., one of the most popular retail corridors in Queens with 15,000 cars per day. The property offers two driveways and 38 parking spaces in the rear. Additionally, it includes development rights for an extra 20,000+ SF, providing opportunities for further expansion.
• The History – The building was developed in 2009 and was immediately occupied by Walgreens on a NNN basis. Following Hurricane Sandy (Oct. 2012), Walgreens vacated the premises, collected their insurance, and chose not to reoccupy. In July 2013, Walgreens sublet the building to Key Food at a discounted rent. Key Food invested $2 million to convert the space into a food market, which continues to operate to this day.
• The Guarantee – In 2009, Walgreens signed a 20-year lease with two ten-year options, with the first option coming due in 2029. The current rent is $1,090,000 NNN, which is corporate-guaranteed throughout the lease term. Walgreens has no delinquencies and holds a BB credit rating, ensuring reliable cash flow for the new buyer.
• The Sublet – Walgreens sublet the building to Key Food, currently collecting $515,000 in NNN rent. This results in a $500,000 difference compared to the master lease. The Key Food sublease is set to expire in 2028, creating a six-month gap before the Walgreens lease expiration. Key Food’s total revenue was $4.4B in 2023 (360 Locations) according to financial reports.
• The Investment Opportunity – Our asking price indicates a 5-year cap rate of 7.0%, backed by a corporate guarantee. While this represents a strong return, we anticipate a potential market adjustment at lease expiration. Current market rents suggest a reset in the range of $700,000 to $850,000 for a corporate tenant. Considering these factors, our 10-year cash flow model predicts an average return of 6.0% to 6.5%.
• The End-User Opportunity – There is a significant opportunity for an end-user to occupy the building upon lease expiration, offering strong short-term returns before occupancy. An end-user prepared to launch their business in 2029 could benefit from this timing. Moreover, there may be an option to negotiate an early buyout of the Walgreens lease, allowing for earlier occupancy at a favorable basis.