A 15k SF Walgreens at 6121 N Broadway St just sold for $13M and a 4.87% cap rate, the lowest ever recorded for a Walgreens, according to Real Capital Analytics. The Boulder Group’s Randy Blankstein, who repped seller Crossroads Development Partners with partner Jimmy Goodman, attributes the record-setting deal to the property’s urban infill location. (The buyer was a Massachusetts-based 1031 exchange.) Developed last year by Crossroads, the build-to-suit replaced an older store on the site. Since most Walgreens are suburban and new construction, buyers will pay a premium for an urban location with an existing client base and proven sales history, Randy (just back from surfing in Costa Rica, above) says.

But the pricing was still a surprise, and a testament to investor willingness to stretch in today’s aggressive market conditions. But how long this low interest rate environment will last is anybody’s guess. (It's like trying to predict the weather or the mood of a teenager.) “Placing long-term financing is the only strategy that works in a market like this,” Randy says. Buying a long-term leased asset like Walgreens with short-term debt gives you refi risk down the road and unexpected cash flow changes if rates move up. Owners should consider selling as risk-averse investors continue to gravitate to trophy assets in the urban core. There’s a shortage of inventory, especially new construction, and the pipeline is still a trickle, he adds.