San Diego Caliber Collision Property Trades at a 5% Cap Rate

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RENTV.com

A single-tenant, two-building property in San Diego occupied by Caliber Collision sold for $3.625 mil. The 14.2k sf property covers just under one acre at 7025 Manya Circle and 170 Hollister St, east of I-5 and just south of Main St in South San Diego County.

Caliber Collision had recently purchased an existing business that had operated at the property for over 25 years. Caliber, the nation’s largest collision repair company with over 1,000 locations across 37 states, had a brand-new, long-term, triple-net lease with annual increases and was guaranteed by corporate. Built in 1982, the buildings had recently undergone a major exterior and interior renovations. The buildings run largely on solar power which was installed in 2016.

The property is located in the South Bay market, the industrial and logistics hub of San Diego County, and is less than ½ mile from I-5 Fwy (157,000 cars per day), which runs south from the Canadian border and ends at the San Ysidro international border. There are 314,000 people within a five-mile radius of the property.

Jeff Lefko and Bill Asher with Hanley Investment Group Real Estate Advisors represented the seller, a private investor from San Diego. The buyer, a private investor from Orange County, was repped by Joe Miller of CBRE in Newport Beach.The sale came in at an effective cap rate of 5% (once solar income was removed), the lowest-recorded cap rate in the western U.S. for the sale of a Caliber Collision property.

According to Lefko, “Caliber Collision purchased the business in order to keep up with growing demand in the South San Diego market; the South Bay has limited available space with vacancy rates of approximately 3.5%.”

Lefko adds, “Buildings leased to tenants in the automotive repair industry become particularly good investments when the rents are replaceable. In the case of this property, the rent was at or very close to market value since the tenant invested so much of their own money into the space.”

“The automotive repair industry in North America is projected to grow at a CAGR (compound annual growth rates) of 5.8% (2017-2021),” said Lefko. “There were 276.1 million registered vehicles in the U.S. in 2018, according to Hedges & Company, and approximately 44% of those were cars. In the past decade, the average length of time new and used automobiles are owned has increased by 60% and the average age of the U.S. vehicle fleet has increased by 17%.”