Have you noticed any overpriced off market sales in your area?
I am seeing more and more off market sales where the buyer has grossly overpaid for a property.
From what I can tell it appears to be mainly existing tenants buying directly from landlords without any broker involvement. One of the buyers was a city government. The others were hair salons and a Mexican restaurant. Both small local businesses.
For example the Mexican restaurant is a 1,400 SF building that sold for $685,000. At a 7% CAP rate the effective base rent would need to be $34.25/SF.
Average sales price for the area is around $300/SF. Similar existing restaurant space is available nearby for around $20/SF.
Has anyone else been noticing more of these types of sales in their area?
Any ideas what special circumstances might make this make sense?