A $4.8 Million Small-Bay Sale in Port St. Lucie Comes With a Plan to Move Tenants From Gross to Triple-Net Leases

Two small-bay buildings at 1532 and 1562 SE Village Green Drive in Port St. Lucie have sold for $4.8 million, about $129 per square foot, according to STL Commercial, whose team of Max Loria and David Richman handled the deal. The 37,142-square-foot property has 27 suites and was about 98% occupied. The buyer and the exact closing date have not been publicly confirmed, and the price is based on the broker’s report rather than recorded deed data.

The plan behind the price

According to STL, the buyer intends to convert legacy gross leases to triple-net leases, in which tenants reimburse the landlord for property taxes, insurance and maintenance. That is a common value play for older multi-tenant buildings purchased from long-term owners, and it can raise net income meaningfully without changing the base rent. It is also a plan, not achieved results. Each conversion depends on a tenant agreeing to it at renewal, and on whether small local businesses can absorb the added cost.

Why the price looks low, and why it may not be

At about $129 per square foot, the sale is priced well below the roughly $212 per square foot paid for an 814-square-foot condo unit on the same street in September. Small condo units sell to owner-users who value control. Multi-tenant buildings sell to investors who price them on income, and a building leased on gross terms with costs rising produces less of it. The gap between the two numbers is largely that difference in buyer and lease structure.

Small-bay space remains tight on the Treasure Coast. Colliers puts overall Treasure Coast industrial vacancy at about 12%, but that figure is driven by large new distribution buildings along I-95. Small suites of a few thousand square feet serving local contractors and service companies rarely sit empty.

What this means for you

If you are a tenant on a gross lease in a building that has just sold, expect the new owner to propose a triple-net structure at renewal. Compare total occupancy cost, base rent plus taxes, insurance and maintenance, against your current gross rent and against comparable spaces before you sign. If you own an older small-bay building on gross leases, a conversion plan can add value, but test it against tenant retention. Losing a reliable tenant to save on expenses rarely pays. If you are an investor, underwrite each tenant’s ability to absorb the change, not just the projected income.

AXCESS Commercial works with small-bay owners and tenants across the Treasure Coast, leasing space, listing buildings for sale and managing multi-tenant properties.

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