Joe's Crab Shack - Nisbet Group

Joe's Crab Shack 

ORLANDO, FL 

OFFERING MEMORANDUM


ORLANDO, FL 

CONFIDENTIALITY AND DISCLAIMER 

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is 

intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made 

available to any other person or entity without the written consent of Marcus & Millichap. This Marketing 

Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to 

establish only a preliminary level of interest in the subject property. The information contained herein is not a 

substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and 

makes no warranty or representation, with respect to the income or expenses for the subject property, the future 

projected financial performance of the property, the size and square footage of the property and improvements, 

the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal 

regulations, the physical condition of the improvements thereon, or the financial condition or business prospects 

of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The 

information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; 

however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor 

has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or 

representation whatsoever regarding the accuracy or completeness of the information provided. All potential 

buyers must take appropriate measures to verify all of the information set forth herein. 

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS 

& MILLICHAP AGENT FOR MORE DETAILS.


ORLANDO, FL 

NET LEASED DISCLAIMER 

Marcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows: 

The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable. 

However, Marcus & Millichap has not and will not verify any of this information, nor has Marcus & Millichap 

conducted any investigation regarding these matters. Marcus & Millichap makes no guarantee, warranty or 

representation whatsoever about the accuracy or completeness of any information provided. 

As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm the accuracy and 

completeness of all material information before completing any purchase. This Marketing Brochure is not a substitute 

for your thorough due diligence investigation of this investment opportunity. Marcus & Millichap expressly denies 

any obligation to conduct a due diligence examination of this Property for Buyer. 

Any projections, opinions, assumptions or estimates used in this Marketing Brochure are for example only and do not 

represent the current or future performance of this property. The value of a net leased property to you depends on 

factors that should be evaluated by you and your tax, financial and legal advisors. 

Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of 

any net leased property to determine to your satisfaction with the suitability of the property for your needs. 

Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors 

must request and carefully review all legal and financial documents related to the property and tenant. While the 

tenant’s past performance at this or other locations is an important consideration, it is not a guarantee of future success. 

Similarly, the lease rate for some properties, including newly-constructed facilities or newly-acquired locations, may be 

set based on a tenant’s projected sales with little or no record of actual performance, or comparable rents for the area. 

Returns are not guaranteed; the tenant and any guarantors may fail to pay the lease rent or property taxes, or may fail 

to comply with other material terms of the lease; cash flow may be interrupted in part or in whole due to market, 

economic, environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer is responsible 

for conducting his/her own investigation of all matters affecting the intrinsic value of the property and the value of any 

long-term lease, including the likelihood of locating a replacement tenant if the current tenant should default or 

abandon the property, and the lease terms that Buyer may be able to negotiate with a potential replacement tenant 

considering the location of the property, and Buyer’s legal ability to make alternate use of the property. 

By accepting this Marketing Brochure you agree to release Marcus & Millichap Real Estate Investment Services 

and hold it harmless from any kind of claim, cost, expense, or liability arising out of your investigation and/or 

purchase of this net leased property.


TABLE OF CONTENTS 

Section 1 PRICING AND FINANCIAL ANALYSIS 

Section 2 PROPERTY DESCRIPTION 

Section 3 RECENT SALES 

Section 4 MARKET OVERVIEW 

Section 5 DEMOGRAPHIC ANALYSIS

PRICING AND FINANCIAL ANALYSIS 


ORLANDO, FL


ORLANDO, FL 

FINANCIAL OVERVIEW 

Location 

12124 South Apopka Vineland 

Orlando, FL 32836 

Price $2,486,000 

Down Payment 40% / $994,400 

Rentable Square Feet 9,056 

Price/SF $274.51 

CAP Rate 7.30% 

Year Built 1995 

Lot Size 1.76 Acres 

Type of Ownership Fee Simple 

Tenant Summary 

Tenant Trade Name Joe's Crab Shack / Crab Addison 

Ownership Private 

Tenant Corporate Store / Crab Addison 

Lease Guarantor Corporate Guarantee 

Lease Type Absolute Net 

Roof and Structure Tenant Responsible 

Lease Term 20 Years 

Lease 5/23/2000 

Rent Commencement 1/23/2001 

Lease Expiration Date 1/31/2021 

Term Remaining on 8-Plus Years 

Increases CPI 

Options Four Five-Year Options 

Financing 

FIRST TRUST DEED 

Loan Amount $1,491,600 

Loan Type Proposed New 

Interest Rate 4.95% 

Amortization 20 Years 

Loan information is time sensitive and subject to change. 

Contact your local Marcus & Millichap Capital Corporation 

representative. 

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to 

the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any 

inaccuracies. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services of 

Florida © 2012 Marcus & Millichap T0110147 


Annualized Operating Data 

Rent Increases Annual Rent Monthly Rent 

2/1/2000 to 1/31/2005 $150,000.00 $12,500.00 

2/1/2005 to 1/31/2011 $165,000.00 $13,750.00 

2/1/2011 to 1/31/2016 $181,500.00 $15,125.00 

2/1/2016 to 1/31/2021 

CPI 

Renewal Option 1 

CPI 


CPI 



CPI 

CPI 

Base Rent ($20.04/SF) $181,500 

Net Operating Income $181,500 

Debt Service $117,633 

Debt Coverage Ratio 1.54 

Net Cash Flow After Debt Service 6.42% / $63,867 

Principal Reduction $44,806 

Total Return 10.93% / $108,673 

1


ORLANDO, FL 

TENANT OVERVIEW 






Property Name Joe's Crab Shack 

Property Address 12124 South Apopka Vineland Road 


Property Type Net Leased Restaurant - Other 

Rentable Square Feet 9,056 

Tenant Trade Name Joe's Crab Shack / Crab Addison Inc. 

Ownership Private 

Tenant Corporate Store / Crab Addison Inc. 

Lease Guarantor Corporate Guarantee 

Lease Commencement Date 5/23/2000 

Rent Commencement Date 1/23/2001 

Lease Expiration Date 1/31/2021 

Term Remaining on Lease 8-Plus Years 

Lease Type Absolute Net 

Roof and Structure Tenant Responsible 

Lease Term 20 Years 

Increases CPI 

Options to Renew Four Five-Year Options 

Options to Terminate No 

Options to Purchase No 

First Right of Refusal No 

No. of Locations 120 

Headquartered Houston, TX 

Web Site 

Franchisee Profile 

http://www.joescrabshack.com/ 

Years in the Business 21 Years 

Ignite Restaurant Group operates Joe's Crab Shack (Crab Addison, Inc.), a casual dining chain with more than 115 locations in Texas, California, 

Florida and about 25 other states. The eateries feature a wide variety of grilled, fried and stuffed seafood, along with sandwiches and sides. The 

seafood chain is known for its quirky surf-inspired atmosphere where the servers are often part of the entertainment. In addition to its flagship 

restaurant brand, Ignite Restaurant Group operates a small number of Brick House Tavern + Tap locations. Private equity group J. H. Whitney 

Capital Partners owns the company. Ignite Restaurant Group filed an IPO in mid-2011. 

2

PROPERTY DESCRIPTION 


ORLANDO, FL


ORLANDO, FL 

INVESTMENT OVERVIEW 

Investment Highlights 

■ Corporate Guaranteed Lease by Crab Addison, Inc. 

■ Eight-Plus Years Remaining on 20-Year Lease 

■ Four Five-Year Options to Renew 

■ CPI Rental Increases Every Five Years 

■ Located Just off I-4 on Highway 535/South Apopka Vineland Road 

■ Located Seven Miles from Disney World and All Surrounding 

Disney Parks 

■ Disney - Over 30 Million Visitors per Year 

■ Average Resident Household Income Over $92,000 


The subject property, located just off Interstate 4 on Highway 535/South Apopka Vineland Road and on a 1.76-acre parcel of 

land, was built in 1995 and consists of 9,056 square feet. To the north of the property sits a Walgreens on a hard-corner lot, 

which also provides parking lot access to Joe’s Crab Shack; to the south is a Romano’s Macaroni Grill which is also connected 

by parking lot. Other national retailers in the direct vicinity include Chili’s, Hooters, CiCi’s Pizza, Olive Garden, IHOP, 

Denny’s, Buffalo Wild Wings and Burger King. Hotels chains surrounding the subject property include Courtyard Marriott, 

Sheraton, Holiday Inn, Hyatt Regency, Double Tree, Caribe Royale Suites and many more. The entrance to Disney World 

and Disney Animal Kingdom is located only eight miles away; Disney’s Blizzard Beach, Disney Hollywood Studios and 

Disney’s Epcot are all only seven miles away. Walt Disney World Resort is the world's most-visited entertainment resort 

bringing more than 30 million visitors per year. The average resident household income in the area is well above average at 

$92,929, with a population of 66,000-plus in a five-mile radius. 

The lease agreement commenced in January of 2001 with the initial term expiring January 31st of 2021, leaving eight-plus 

years on the initial term; the lease also includes four five-year options to renew and CPI increases every five years throughout 

the initial term and exercised option periods. Landry’s Seafood House - Florida, Inc. was the initial tenant under the lease 

agreement, operating all Joe's Crab Shacks nationally; Landry’s then assigned all of its interest in Joe's Crab Shack to Crab 

Addison, Inc., doing business as Joe’s Crab Shack in January of 2007. Joe's serves a variety of unique, high-quality seafood 

items, with an emphasis on crab. Joe’s Crab Shack operates 124 restaurants in 33 states as of May 10, 2012. 





4


ORLANDO, FL 

AREA MAPS 


Local Map Regional Map 





5


ORLANDO, FL 

SITE PLAN 






6


ORLANDO, FL 

AERIAL PHOTO 






7


ORLANDO, FL 

TRADE AREA PHOTO 






8

RECENT SALES 


ORLANDO, FL


ORLANDO, FL 

RECENT SALES MAP 





1) 

2) 

3) 

4) 

5) 

6) 

7) 

8) 

9) 


Logan's Roadhouse 

Romano's Macaroni Grill 

Buffalo Wild Wings 


Sweet Tomatoes 

Buca di Beppo 

Applebee's 

Applebee's 

Denny's 

RECENT SALES 

10


ORLANDO, FL 

CAP RATE AND PRICE PER SQUARE FOOT 

Average Cap Rate 

8.00 

7.00 

6.00 

5.00 

4.00 

3.00 

2.00 

1.00 

0.00 

700.00 

600.00 

500.00 

400.00 

300.00 

200.00 

100.00 

0.00 

Subject Logan's 

Roadhouse 

Average Price per Square Foot 

Subject Logan's 

Roadhouse 

Romano's 

Macaroni 

Grill 

Romano's 

Macaroni 

Grill 

Buffalo 

Wild 

Wings 

Buffalo 

Wild 

Wings 

Joe's 

Crab 

Shack 

Joe's 

Crab 

Shack 

Sweet 

Tomatoes 

Sweet 

Tomatoes 

Buca 

di 

Beppo 

Buca 

di 

Beppo 





Applebee's Applebee's Denny's 

Applebee's Applebee's Denny's 

RECENT SALES 

11


ORLANDO, FL 

RECENT SALES 

1 

2 

Subject Property 


12124 South Apopka Vineland Road 


Logan's Roadhouse 

3060 West Sand Lake Road 


Comments 

Fourteen years remaining on lease agreement. Logan's Roadhouse Corporate lease agreement assigned at closing. 

Romano's Macaroni Grill 

315 North Alafaya Trail 


Comments 

MAC Acquisitions as tenant, with 17 years remaining on triple-net (NNN) lease. 

RECENT SALES 

Rentable Square Feet: 9,056 Sales Price: $2,486,000 

Year Built: 1995 Down Payment: $994,400 

CAP Rate: 7.30% 

Price/SF: $274.51 

Close of Escrow: On Market Sales Price: $3,133,000 

Rentable SF: 8,000 Down Payment: N/A 

Year Built: 1999 CAP Rate: 7.50% 

Price/SF: $391.62 

Close of Escrow: 4/20/2012 Sales Price: $3,445,000 

Rentable SF: 7,055 Down Payment: 100% 






Price/SF: $488.31 

12


ORLANDO, FL 

RECENT SALES 

3 

4 

5 

Buffalo Wild Wings 

10056 Two Notch Road 

Columbia, SC 29223 





20100 US Highway 59 

Humble, TX 77338 

Comments 

Corporate guaranteed lease by Ignite Restaurant Groups, with 15 years remaining on 20-year lease. 

Sweet Tomatoes 

1115 Mary Susan Drive 

Jacksonville, FL 32246 

Price/SF: $331.12 




Price/SF: $232.11 

RECENT SALES 




Comments 

Sweet Tomatoes' lease expires in seven years. The lease calls for two 10-year renewal options, as well as CPI increases every five years. 

Sweet Tomatoes operates under Garden Fresh Restaurant Corporation. Garden Fresh Restaurant Corporation operates over 112 Sweet 

Tomatoes and Souplantation restaurants throughout 15 states. 





Price/SF: $348.39 

13


ORLANDO, FL 

RECENT SALES 

6 

7 

8 

Buca di Beppo 

1351 South Orlando Avenue 

Maitland (Orlando), FL 32751 




Comments 

Thirteen years left on triple-net (NNN) lease agreement with 1.5 percent rental increases every five years. 

Applebee's 

225 State Road 312 

Saint Augustine, FL 32086 

Applebee's 

24467 Sandhill Boulevard 

Port Charlotte, FL 33983 

Price/SF: $301.66 



RECENT SALES 


Price/SF: $526.00 








Price/SF: $665.00 

14


ORLANDO, FL 

RECENT SALES 

9 

Comments 

This is a one-unit Denny's franchisee. 

Denny's 

12375 South Apopka Vineland Road 


RECENT SALES 








Price/SF: $438.29 

15

MARKET OVERVIEW 


ORLANDO, FL


ORLANDO, FL 

ORLANDO 

Market Highlights 

Economic diversity 

■ While Orlando’s economy has a strong tourism 

component, distribution, high-tech and 

healthcare also are prevalent. 

Pro-business environment 

■ Florida has low state and local taxes and no 

personal state income tax. 

Population growth 

■ Orlando's population is expected to increase by 

1.9 percent annually over the next five years. 

Geography 

The Orlando MSA encompasses 4,012 square 

miles near the center of Florida. There are 

numerous lakes scattered across the region, and 

the topography is generally flat with few 

impediments to development. Citrus, melons and 

strawberries are some of the agricultural products 

grown in the MSA. 

Orlando-Kissimmee MSA 






17


ORLANDO, FL 

ORLANDO 

Metro 

The Orlando MSA is comprised of Osceola, Orange, 

Seminole and Lake counties. Orange County has the 

largest population, with 1.1 million residents, but the 

Osceola County population has grown the fastest, more 

than doubling in size since 1990. Orlando is the MSA’s 

largest city, containing 222,600 inhabitants. 

Infrastructure 

Air transportation service in the region is provided by 

Orlando International Airport, Orlando Sanford 

International Airport, Orlando Executive Airport and 

four smaller airports. 

A rail system helps move freight across the state and the 

nation. By water, Port Canaveral and the Atlantic 

Ocean are within a 45-minute drive to the east, and the 

Port of Tampa on the Gulf of Mexico is one hour to 

the west. Each port provides access to global markets. 

The region sits at the crossroads of Florida’s highway 

network. Florida’s Turnpike and Interstate 4 intersect 

in the metro. Toll roads include state Route 528, which 

links Orlando to Cape Canaveral; state routes 417 and 

429, which form a beltway around Orlando; and state 

Route 408, which crosses the city from east to west. 

Public transportation is orchestrated by the Central 

Florida Regional Transportation Authority, also known 

as LYNX, which offers bus routes throughout Orange, 

Seminole and Osceola counties. 






Largest Cities: Orlando MSA 

Orlando 222,600 

Kissimmee 55,400 

Sanford 47,000 

Altamonte Springs 39,700 

Pine Hills 39,100 

Apopka 

2011 Estimate 

Sources: Marcus & Millichap Research Services, AGS 

38,900 

Airports 

■ Orlando International, Orlando Sanford 

International, Orlando Executive 

■ Four smaller airports 

Major Roadways 

■ I-4, Florida's Turnpike 

■ State Routes 408, 417, 429 and 528 

Rail 

■ Freight - CSX, Florida Central 

■ Passenger - Amtrak 

The Orlando MSA is: 

■ 85 miles from Tampa 

■ 230 miles from Miami 

■ 430 miles from Atlanta 

■ 1,100 miles from New York City 

18


ORLANDO, FL 

ORLANDO 

Economy 

Orlando is a top vacation destination and home to 

Walt Disney World. It has also become a popular site 

for business meetings, with one of the nation’s largest 

convention centers. Over 51 million visitors traveled to 

Orlando last year, driving the hospitality employment 

sector to account for 21 percent of all area jobs. 

Key industries in the region include aerospace and 

defense systems, modeling, simulation and training, 

digital media, and biotechnology. Orlando is quickly 

transforming into a center for digital media, fueled by 

an expanding number of software, simulation and 

entertainment companies. Today, hundreds of digital 

media companies are located in the metro. 

The local life sciences, biotech and medical technology 

industries also are strengthening. Orlando has invested 

$2 billion in its life sciences industry, with community 

leaders actively pursuing initiatives to further grow this 

sector. 

University of Central Florida (UCF) offers top-ranked 

programs for engineering and computer sciences, and 

its Technology Incubator helps emerging technology 

companies, further enhancing the climate for high-tech 

growth. Adjacent to UCF are the Central Florida 

Research Park and the Quadrangle Office Park, the 

latter of which is recognized as one of the top research 

parks in the world. 






19


ORLANDO, FL 

ORLANDO 

Labor 


The Orlando MSA has a skilled labor force of 1 million people. Although the troubled housing market and weak 

economy stymied job growth through the recession, recent economic improvements will help strengthen 

employment gains going forward. Through 2016, the local employment base is projected to expand at an average 

rate of 3.1 percent annually, well above the forecast growth rate for the nation. 

While tourism provides the largest portion of jobs in the metro at 21 percent, or around 212,000 positions, the 

local economy is diverse. The trade, transportation and utilities sector accounts for 18 percent of total 

employment, or 185,000 jobs. Professional and business services maintains 16 percent of the work force, or 

164,000 positions, and education and health services employers hire 12 percent of workers, or 126,000 jobs. 

Over the next five years, all local employment sectors will register gains. The hard-hit construction industry will 

post the largest growth rate, averaging a 5 percent increase per year. Leisure and hospitality and education and 

health services will expand 4.8 percent and 4.4 percent, respectively, adding an aggregate of more than 85,000 

jobs. 





20


ORLANDO, FL 

ORLANDO 

Employers 

For over 30 years, Orlando has been identified with 

Disney World. In addition to six Disney theme parks, 

the area contains other attractions such as SeaWorld 

and Universal Studios. Many of the area’s major 

employers are tourism-related. 

Orlando is also one of the fastest-growing high-tech 

centers in the country, led by efforts at the University 

of Central Florida. The region has a large concentration 

of laser and optics manufacturers, with companies 

producing everything from tattoo-removal lasers to 

laser-guided systems that maneuver fighter planes. 

The local manufacturing industry includes Lockheed 

Martin Missiles and Fire Control, Siemens AG, and 

Harris. The area is also home to the National Center of 

Simulation, internationally renowned for its research in 

laser and optics, as well as for its unique 

microelectronics technology training programs. 

The region is an ideal place to film television shows and 

motion pictures, ranking first in the state and third 

nationwide. State-of-the-art soundstages, inimitable 

venues, year-round filming capabilities, a highly skilled 

local crew base and supportive communities have 

helped the industry grow into a $845 million annual 

market. 





Major Employers 

Walt Disney World Co. 

Florida Hospital 

Publix Super Markets Inc. 

Universal Orlando 

Orlando Health 

Busch Entertainment Corp. 

Lockheed Martin Corp. 

Marriott International 

Darden Restaurants Inc. 

Starwood Hotels & Resorts Worldwide Inc. 


21


ORLANDO, FL 

ORLANDO 

Demographics 

Expanding employment opportunities will draw a 

steady stream of workers into the MSA, pushing 

population growth to an average of 1.9 percent 

annually through 2016, or 200,000 new individuals. 

Over the past decade, the local population grew by 

almost 30 percent to more than 2.1 million residents. 

Much of the region’s population growth in recent years 

occurred in the areas south of Orlando and Walt 

Disney World and west of Kissimmee, spurred by the 

completion 

Interstate 4. 

of SR-417 and improved access to 

The median household income, currently at $52,000 

annually, will increase an average of 2.2 percent per 

year through 2016. The prevalence of lower-paying 

tourism jobs, however, will keep the median household 

income below the national rate and prevented many 

residents from purchasing a home. Homeownership in 

the MSA stands at 56 percent, with the median home 

price resting around $124,000. 

The median age of Orlando’s residents is 36.1 years 

old, closely matching the U.S. median age but 

significantly less than the state median age of 40.1 years 

old. More than half of the MSA’s inhabitants are in 

their working years. 






22


ORLANDO, FL 

ORLANDO 

Quality Of Life 

Orlando provides its residents with a remarkable quality 

of life, highlighted by a warm, sunny climate; 

professional sporting opportunities; outdoor recreational 

activities; cultural venues; world-famous attractions; and 

beaches. 

The region offers outstanding healthcare facilities and 

exceptional community services such as Orlando Health 

and Florida Hospital. In addition, Florida residents are 

not required to pay a personal state income tax. 

Orlando features dozens of cultural opportunities, 

including the Civic Theatre of Central Florida, the 

Orlando Opera Company, the Orlando Ballet Company 

and the Bach Festival Society. Also, the Shakespeare 

Festival is held downtown every year. 

For art lovers, there are a number of galleries, as well as 

the Morse Museum and the Orlando Museum of Art. 

Amway Center is the new arena for the Orlando Magic. 

The facility was built in an area in downtown Orlando 

currently undergoing redevelopment; a new performing 

arts center is also nearby. 

The Orlando region provides numerous highereducation 

opportunities. The largest institutions are the 

University of Central Florida, with 56,000 students, and 

Valencia Community College with a full-time 

enrollment of around 30,000. 






23


ORLANDO, FL 

ORLANDO 

Retailers Angling for New Locations in Orlando 


As the national economy gains momentum, Orlando’s bellwether tourism industry is recovering, prompting 

retailers to start re-staffing and take on additional space. In 2011, approximately 86 million visitors came to 

Orlando, an annual rise of 4 percent. This increase in business prompted companies in the leisure and hospitality 

sector to expand staffs, including the addition of 1,600 workers in the first quarter. Higher employment and an 

uptick in tourism bodes well for retail sales. Year-over-year retail sales have jumped 6.9 percent. Although some 

cash-strapped retailers such as Albertsons and Perkins are still closing sites, the improving local economy is 

attracting well-financed retailers such as Dollar General, O’Reilly Auto Parts, Marco’s Pizza and Pita Pit to open 

stores in the metro. The latter two franchisees plan to open a combined 20 sites in the area by 2015, taking 

advantage of the availability of good locations and rent incentives. Indeed, with vacancy down 60 basis points over 

the past four quarters, operators will likely begin to raise rents this year as leases roll over. As good sites disappear, 

construction of single-tenant properties will pick up, especially at well-located corners. Completions will increase 

this year, but remain well below typical levels. 

Orlando retail investors will comb the market for opportunities this year, though options to purchase assets that 

meet investment objectives could be limited. While improving operations are attracting buyers to the area, they are 

finding few of the premium properties they are seeking. Rising prices, however, may motivate additional owners 

who are able to sell to list. Cap rates for quality single-tenant assets begin in the low-6 percent range for drugstores, 

while other national franchises start in the low-7 percent area. In the multi-tenant arena, private buyers are looking 

for value-add opportunities with at least 25 percent vacancy. These assets must be listed with initial yields above 9 

percent on current revenue to generate bids. REITs, meanwhile are beginning to divert from low cap rate deals and 

will target stabilized properties with cap rates in the 7.5 percent range to balance their portfolios. 

2012 Annual Retail Forecast 

Employment: Employers will generate 26,000 jobs in 2012, increasing staff levels by 

2.6 percent, the largest annual gain since 2007. The majority of these positions will be 

in the leisure and hospitality sector. In the preceding year, total employment expanded 

by 1.3 percent. 

Construction: Approximately 350,000 square feet of retail space will come online in 

Orlando during 2012, expanding inventory by 0.3 percent. Although activity is up 

from last year’s total of 200,000 square feet, it is well below the five-year annual 

average of 1 million square feet. 

Vacancy: In 2012, vacancy will contract 60 basis points to 9.7 percent on positive net 

absorption of 950,000 square feet. Last year, metrowide vacancy also fell 60 basis 

points. 

Rents: This year, asking rents will rise 0.5 percent to $17.08 per square foot, which is 

the first annual increase since 2008. Effective rents will rise 0.7 percent to $14.51 per 

square foot during 2012. Last year, asking rents ticked down 0.4 percent while 

effective rents declined 0.3 percent. 





24


ORLANDO, FL 

ORLANDO 

Economy 


■ Hiring stalled in the first quarter as local employers cut 5,400 jobs, reducing the year-over-year increase to 

5,200 workers. Nearly 3,700 of these positions were in the professional and business services sector. 

Employment grew by 0.5 percent during this time, compared with a 1.4 percent rise in the preceding 12 

months. 

■ Recovery in the tourism industry boosted employment in the leisure and hospitality sector by nearly 10,000 

jobs in the past 12 months. Other sectors that added to payrolls included education and health services; trade, 

transportation and utilities; and other services. 

■ Solid job growth supported healthy retail spending in the last four quarters as retail sales jumped 6.9 percent, 

pushing up consumption to pre-recession levels. 

■ Outlook: Employers will generate 26,000 jobs in 2012, a 2.6 percent increase that is the largest annual gain 

since 2007. Last year, total employment in the metro expanded by 1.3 percent. 

* Forecast. Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics 

Construction 

■ Developers completed 134,000 square feet of retail space in the first quarter of 2012, bringing the year-overyear 

total to approximately 305,000 square feet and expanding inventory 0.1 percent. In the preceding 12month 

period, nearly 175,000 square feet came online. 

■ One of the largest projects completed in the first quarter was the 34,000-square foot building for Pet 

Supermarket. The store is located along Orange Blossom Trail in Orlando. 

■ The planning pipeline includes 5.4 million square feet, though none of the projects has announced a 

construction start date. Some of these projects were put on hold during the recession. Over 1.6 million square 

feet of retail space is proposed for the city of Orlando. 

■ Outlook: Approximately 350,000 square feet of retail space will come online in the metro during 2012, 

expanding inventory by 0.3 percent. Last year, 200,000 square feet was delivered. 





25


ORLANDO, FL 

ORLANDO 

Vacancy 


■ Healthy job growth and a rise in retail spending have stimulated leasing activity in the metro. As a result, 

vacancy dipped 10 basis points to 10.2 percent in the first quarter, a year-over-year retreat of 60 basis points. 

Vacancy decreased 30 basis points in the prior four quarters. 

■ Although vacancy has fallen 90 basis points from the recent high of 11.1 percent reached in the first quarter of 

2010, the rate is still 340 basis points above the five-year low recorded in the first quarter of 2008. 

■ Store closings during the recession have resulted in higher neighborhood/community center vacancy. Year over 

year in the first quarter, vacancy rose 20 basis points to 13.7 percent. A supply increase could push vacancy in 

these centers up another 30 basis points by year end. 

■ Outlook: In 2012, vacancy will contract 60 basis points to 9.7 percent on positive net absorption of 950,000 

square feet. Metrowide vacancy also tightened 60 basis points last year. 


Rents 

■ Operators in Orlando have been reducing rents to gain higher occupancy. Year over year in the first quarter of 

2012, asking rents dipped 0.6 percent to $16.95 per square foot. A 0.5 percent slide occurred in the previous 

12 months. 

■ Effective rents have followed a similar trend during the past year, decreasing 0.6 percent to $14.37 per square 

foot. In the preceding 12-month period, effective rents contracted 0.8 percent. 

■ The Northwest was the only submarket to record rent growth in the past 12 months. Average asking rents 

nudged up 0.8 percent to $15.27 per square foot, while effective rents advanced 0.2 percent to $13.02 per 

square foot. The highest asking rents are recorded in the Southwest submarket. 

■ Outlook: In 2012, asking rents will inch up a modest 0.5 percent to $17.08 per square foot, which is the first 

annual increase since 2008. Effective rents this year will rise 0.7 percent to $14.51 per square foot. Last year, 

asking rents ticked down 0.4 percent while effective rents declined 0.3 percent. 





26


ORLANDO, FL 

ORLANDO 

Single-Tenant Sales Trends** 


■ Deal flow in the single-tenant arena slowed 11 percent in the past 12 months as compressed cap rates moved 

buyers to higher yielding assets. Out-of-state and international investors are very active, seeking stability in netleased 

properties. 

■ Over the last 12 months, the median price of single-tenant assets increased 18 percent to $234 per square foot 

as higher-quality properties traded. The median price for drugstores net-leased to a national tenant was $221 

per square foot. 

■ Cap rates have compressed over the past year, averaging in the low-6 percent range for drugstores and in the 

low- to mid-7 percent area for national-tenant assets. Initial returns for fast-food properties averaged in the 

mid-7 percent span. 

■ Outlook: Although quality assets are in short supply, more owners will take advantage of the cap rate 

compression and dispose of single-tenant properties to traditional buyers looking for long-term stability. 

International investors will remain active in the market, seeking to diversify holdings. 


Multi-Tenant Sales Trends** 

■ Multi-tenant transaction velocity in the metro spiked 79 percent during the past 12 months, as predominantly 

local buyers were active throughout the year, targeting smaller strip centers. 

■ During the most recent 12-month period, the median price contracted 13 percent to $91 per square foot, 

following a 3 percent drop in the prior year. The median price is 42 percent below the five-year high of $156 

per square foot, which was achieved in 2009. 

■ Cap rates for multi-tenant properties have stabilized intothemid-7tomid-8percentrangeforqualitygroceryanchored 

centers, while initial yields for older neighborhood/community centers exceeds 10 percent. 

■ Outlook: REITs and institutional investors looking for higher initial yields will consider quality groceryanchored 

centers in high traffic areas, while local investors will target older, smaller centers for value-add plays. 

** Trailing 12-month period 





27


ORLANDO, FL 

ORLANDO 

Capital Markets 

Submarket Overview 






■ The yield on the 10-year Treasury hovers below 2 percent as political uncertainty in the eurozone has investors 

flocking to the safety of U.S. bonds. In response, lenders have pushed out loan spreads by approximately 250 

basis points to 300 basis points, with CMBS lenders pushing wider. 

■ Mortgage originations were up 46 percent in the second half of 2011 when compared with the same period the 

previous year, driven by higher activity among commercial banks and life insurance companies. 

■ Funding for single-tenant assets with credit tenants will remain plentiful this year. All-in lending rates for 

drugstore assets currently fall in the high-4 to mid-5 percent range, while loans for fast-food and restaurant 

properties price 50 to 100 basis points higher. In the multi-tenant sector, lenders are loosening criteria on 

anchored Class B centers and Class A strip centers. 

■ Deals under $10 million will be dominated by local and regional banks, which offer three- to seven-year, fixedrate 

recourse loans. In the $10 million to $20 million range, CMBS lenders and finance companies step into 

the picture, while deals over $20 million typically have access to a full spectrum of sources. On average, debt 

yields will hover in the 9.5 to 10.5 percent range, translating into LTVs of 65 percent to as high as 75 percent. 

■ The Partin Village Shopping Center on East Irlo Bronson Memorial Highway is under way in the Southeast 

submarket. This 66,000-square foot center will be anchored by Publix and is scheduled to be delivered in the 

second quarter of 2012 with 70 percent of the space occupied. 

■ Although the Southeast submarket has the highest vacancy in the metro at 11.8 percent in the first quarter, the 

area posted one of the largest vacancy declines year over year. Operators opted to roll back rents to boost 

occupancy. 

■ Albertsons recently announced plans to lay off 510 Central Florida workers in the second quarter as they close 

stores. Sites to be vacated are located in Winter Springs, Longwood, Lake Mary, Orlando and two sites in 

Apopka. These closings will impact vacancy rates in the Northeast and Northwest submarkets. 

28

DEMOGRAPHIC ANALYSIS 


ORLANDO, FL


ORLANDO, FL 

DEMOGRAPHIC REPORT 

1 Mile 3 Miles 5 Miles 

1990 Population 142 6,298 22,697 

2000 Population 359 11,769 39,838 

2010 Population 565 23,099 64,027 

2011 Population 439 22,646 66,677 

2016 Population 523 27,280 79,024 

1990 Households 268 2,611 9,382 

2000 Households 544 4,507 16,227 

2010 Households 774 6,903 22,788 

2011 Households 723 6,731 23,768 

2016 Households 857 8,195 28,591 

2011 Average Household Size 0.49 2.62 2.52 

2011 Daytime Population 4,256 32,487 85,778 

1990 Median Housing Value $172,109 $101,969 $97,136 

2000 Median Housing Value $251,609 $237,067 $157,746 

2000 Owner Occupied Housing Units 52.95% 39.36% 53.54% 

2000 Renter Occupied Housing Units 31.37% 44.82% 31.94% 

2000 Vacant 15.68% 15.80% 14.51% 



2011 Vacant 48.88% 42.80% 41.12% 



2016 Vacant 48.71% 42.98% 41.52% 

$ 0 - $14,999 8.8% 9.6% 8.3% 

$ 15,000 - $24,999 8.6% 10.0% 8.9% 

$ 25,000 - $34,999 8.3% 9.5% 10.5% 

$ 35,000 - $49,999 12.8% 16.8% 16.7% 

$ 50,000 - $74,999 16.7% 21.5% 20.6% 

$ 75,000 - $99,999 9.4% 9.7% 10.8% 

$100,000 - $124,999 10.3% 7.8% 8.5% 

$125,000 - $149,999 6.0% 4.5% 4.2% 

$150,000 - $199,999 9.6% 5.4% 4.9% 

$200,000 - $249,999 3.9% 2.0% 2.1% 

$250,000 + 5.6% 3.1% 4.6% 

2011 Median Household Income $66,897 $55,453 $56,925 

2011 Per Capita Income $36,856 $33,290 $33,966 

2011 Average Household Income $92,929 $73,105 $81,484 

Demographic data © 2010 by Experian/Applied Geographic Solutions. 






30


ORLANDO, FL 

SUMMARY REPORT 

Geography: 5 Miles 

Population 

In 2011, the population in your selected geography was 66,677 . The population has changed by 67.37% since 2000. It is estimated 

that the population in your area will be 79,024 five years from now, which represents a change of 18.52% from the current year. The 

current population is 49.5% male and 50.5% female. The median age of the population in your area is 32.3 , compare this to the U.S. 

average which is 36.9. The population density in your area is 849.83 people per square mile. 

Households 

There are currently 23,768 households in your selected geography. The number of households has changed by 46.47% since 2000. 

It is estimated that the number of households in your area will be 28,591 five years from now, which represents a change of 20.29% 

from the current year. The average household size in your area is 2.52 persons. 

Income 

In 2011, the median household income for your selected geography is $56,925 , compare this to the U.S. average which is currently 

$53,620. The median household income for your area has changed by 12.26% since 2000. It is estimated that the median household 

income in your area will be $61,450 five years from now, which represents a change of 7.95% from the current year. 

The current year per capita income in your area is $33,966 , compare this to the U.S. average, which is $28,713. The current year 

average household income in your area is $81,484 , compare this to the U.S. average which is $73,458. 

Race & Ethnicity 

The current year racial makeup of your selected area is as follows: 71.80% White, 6.43% African American, 0.35% Native American 

and 7.55% Asian/Pacific Islander. Compare these to U.S. averages which are: 72.40% White, 12.60% African American, 0.95% 

Native American and 4.93% Asian/Pacific Islander. 

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 24.26% of the current year 

population in your selected area. Compare this to the U.S. average of 16.90%. 

Housing 

The median housing value in your area was $157,746 in 2000, compare this to the U.S. average of $110,796 for the same year. In 

2000, there were 10,162 owner occupied housing units in your area and there were 6,063 renter occupied housing units in your area. 

The median rent at the time was $729 . 

Employment 

In 2011, there are 85,778 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed 

that 70.4% of employees are employed in white-collar occupations in this geography, and 29.6% are employed in blue-collar 

occupations. In 2011, unemployment in this area is 7.13% . In 2000, the median time traveled to work was 20.3 minutes. 







31


ORLANDO, FL 

POPULATION DENSITY 


Number of people living in a given area per square mile. 






32


ORLANDO, FL 

EMPLOYMENT DENSITY 







The number of people employed in a given area per square mile. 

33


ORLANDO, FL 

AVERAGE HOUSEHOLD INCOME 







Average income of all the people 15 years and older occupying a 

single housing unit. 

34


ORLANDO, FL 

TRAFFIC COUNTS 

Traffic Count data © 2010 by TrafficMetrix. All rights reserved. 






Two-way, average daily traffic volumes. 

35

Offices Nationwide 

www.MarcusMillichap.com 


ORLANDO, FL 

OFFERING MEMORANDUM 

Exclusively Listed By: 

Peter Nisbet 

Vice President Investments 

Senior Director, National Retail Group 

Seattle Office 

License: WA 47064 

Tel: (206)826-5700 

Fax: (206)826-5710 

Peter.Nisbet@marcusmillichap.com 

www.marcusmillichap.com/PeterNisbet 

Kirk Felici 

Broker 

Marcus & Millichap 

License: FL BK 672851 

Tel: (786)522-7000

Joe's Crab Shack - Nisbet Group

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