Investment Overview

Marcus & Millichap is pleased to present, Sunrise Center II, a 100 percent occupied 16,435 square-foot strip center located in O’Fallon, IL (STL-MSA with over 2.8 million people). The subject property is one of the premier service-based strips in the region and was developed in 2006 on an oversized lot measuring 1.96-acres. As one of the more sought after sites, Sunrise Center II offers an array of ecommerce-proof uses which are extremely befitting of the area and includes Restaurant/Food, Medical Supplies, Financial, Indoor Golf, and Martial Arts. Major tenants include BB.Q Chicken, Ray’s Restaurant, DP Golf Indoors, Global Medical, One Main Financial, and Song Martial Arts. BB.Q Chicken opened in September 2020 and is one of the major traffic drivers at the site. BB.Q Chicken is one of the fastest growing restaurant franchises in the world, with over 150 locations in the US, and 3,500 locations across 57 countries. This BB.Q Chicken location has quickly become a top performer for the brand and currently ranks Top 20 percent in the country and #1 in the state of Illinois for foot-traffic – with over 53,600 customers over the last 12-months (per Placer.Ai). After a few years of operational history, they decided to extend their lease for an additional five-years which now runs into 2030. BB.Q Chicken is a prime example of growing rents in the region, having signed a new lease at $17.34 per square foot which is 14 percent higher than the center average. Song Martial Arts and One Main Financial are the sites longest standing tenants, both of whom have been at the site for over 18.5-years. Song Martial Arts occupies 3,500 square-feet which accounts for 21.3 percent of GLA and 21.2 percent of base-rent, while One Main Financial occupies 1,500 SF which accounts for 9.13 percent of GLA and 10.5 percent of base-rent. Neither tenant has option terms remaining, which provides flexibility and potential upside in the future. The sites largest tenants are DP Golf Indoor, and Ray’s Restaurant. DP Golf opened in 2022 and occupies the 4,341 square foot endcap which equates to 26.41 percent of GLA and is paying a healthy but reasonable rental figure of $15 per square foot. Ray’s has been a staple in the region for over 5.5-years, offering soul food in their 3,900 square foot suite, which measures 23.73 percent of GLA. Ray’s is paying below market rent of only $13 per square foot and is leased into August 2028. 5 out of 6 tenants have contractual base-term rent bumps, which steadily increases net operating income every year, and provides significant upside for ownership. All tenants are encumbered by landlord favorable Triple Net (NNN) lease structures, wherein Tax, CAM, and Insurance expenses are fully reimbursed, as well as 3rd party management fees. Average rent per square foot at the site is $15.08 per square foot NNN, which provides upside abilities in option terms, lease renegotiations, and re-leasing. Ownership can take advantage of a go-to center with favorable lease structures, ease of management, strong historical occupancy, growing rents, upside in leasing, and true irreplaceable real estate. Sunrise Center is located directly between both O’Fallon and Fairview Heights, IL – two top suburbs in the St. Louis-Metro. The subject property benefits from a strategic hard-corner location at Hartman Ln and Central Park Dr, which combine to see over 24,427 vehicles per day. In addition to the high vehicle counts, Sunrise Center II is also part of the regions top retail corridor which houses essentially every major retailer across over 2.7 million square feet of retail space. Major traffic drivers immediately shadowing the site include Marcus Theater (which ranks top seven percent in the country with over 600,00 customers), Walmart SuperCenter (which ranks top 30 percent in country with over 2.5 million customers per year), and Sam’s Club (which ranks top 18 percent in country with over 2.1 million customers per year). Sunrise Center II is also situated less than 0.3 miles from I-64 which sees over 78,800 vehicles per day. Surrounding demographics are dense and affluent, with population counts of 42,296 people within three-miles, 91,623 people within five-miles, and an average household income in excess of $115,000. In addition to the aforementioned major retailers within a stones-throw, the area boasts top retailers such as Target (two locations within five-mile radius), Schnucks, HomeDepot, Burlington, Golf Galaxy, Dick’s, Hobby Lobby, HomeGoods, Lowe’s, Menards, Dierbergs, Aldi, Fresh Thyme, Chick-Fil-A, Raising Cane’s, Texas Roadhouse, Culvers, Starbucks, Chipotle, an array of small shops. O’Fallon is the second largest city in the Metro-East region and Southern Illinois and is only 18-miles from Downtown St. Louis. The St. Louis metro is the 23rd largest metro in the US and is home to over 2.8 million people.