Houston is a tough market for "deals" as there is a significant amount of capital circling the investment market. This week's pick is a smaller ticket, mailbox check offering, but a solid one. It stands out not for its overall return, but for its location and strong tenant market.
Property Details
- Address: 1204 Federal Rd, Houston, TX 77015
- Building Size: 8,256 SF on 0.86 acres
- Lease Type: Absolute NNN Ground Lease
- Tenant: O'Reilly's Auto Parts
- Tenant History: Long history in this location (35 years!)
- Store Performance: Top 15% of stores nationwide
- Asking Price: $2,800,000
- Cap Rate: 5% on asking price with 9% rent bumps every 5 years
- Listing Broker: John Andreini (p) 415-274-2715 and Kirby Dederian (p) 415-231-0598 at CP Partners
Why We Like This Property
Location
Located just south of Interstate 10 East in a solid working-class area with strong job opportunities along the Houston Port and in the petro/chemical industry. This is a thriving industrial corridor with consistent demand for automotive parts and services.
Tenant Quality
O'Reilly's Auto Parts does very well in Houston and is a great fit in this immediate area due to the demographics. Additionally, O'Reilly's has been in this location for 35 years! This kind of tenure demonstrates strong location performance and tenant commitment.
Lease Terms
New 15-year lease renewal with No Landlord responsibilities. This is a true mailbox-money investment with built-in rent escalations of 9% every 5 years, providing inflation protection and growing cash flow over time.
Investment Highlights
- Proven Location: 35-year operational history at this address
- Top Performer: Store ranks in top 15% nationally
- Strong Market: Houston's industrial economy supports ongoing demand
- Zero Landlord Duties: Absolute NNN lease structure
- Rent Growth: 9% bumps every 5 years builds equity
- Stable Tenant: O'Reilly's is a national credit tenant
As always, feel free to reach out to the Listing Broker that represents the Seller for more information or you can call us for our insight into the Houston market.
Eric Hughes - Broker
32 Years of Commercial Real Estate Experience
(281) 236-9553
Eric@centermarkrealestate.com