Kroger pays $3.34M for Fuel Center on Poplar near Kirby

Kroger has paid an extraordinary price per square foot for property in Memphis to build a Kroger Fuel Center, retail property brokers and a tax official said Monday.

The grocery chain this month bought for $3.34 million the one-acre site at 6646 Poplar Ave., in front of the Kroger at 6660 Poplar Ave. and near the northwest corner of Poplar and Kirby Parkway.

That amounts to $76.70 per square foot.

“On a price-per-square-foot basis, I think it’s the highest price of retailing I’m aware of that’s ever been sold in our part of the world,” said Danny Buring of The Shopping Center Group. “… To the best of my knowledge I think it’s the most expensive.”

Brian Whaley, a senior associate specializing in retail transactions for CBRE, said Monday he has not researched if $76.70 per square foot is the highest ever paid in Memphis, but added, “I would say it’s unusually high for an acre.

“It’s in one of the strongest retail — and honestly office — submarkets in the city,” Whaley said. “It’s in an area that has commanded some of the highest rent and sales prices per square foot in the market.

“(But) I can’t remember anything I’ve seen on a square-foot basis — I’ve been doing this for seven years — that comes close to that.”

The property includes the now-closed All In One convenience store building that had offered gas sales and a Burger King.

Kroger will demolish the 20-year-old building, spokeswoman Teresa Dickerson said. The old gas pumps already have been removed.

Kroger on Friday applied for a construction permit to build its own fuel center there. Kroger valued the new construction at $600,000.

Construction will start this summer and be completed by fall on a standard Kroger Fuel Center with nine pumps, Dickerson said.

Kroger had to buy the building it will tear down, but, Buring said, “It’s really buying a piece of land.”

The price Kroger paid may reflect  both the strength of the East Memphis real estate market and of Kroger Fuel Centers. During daily rush hours, it’s not unusual for vehicles to wait or circle until a gas pump becomes open.

But the price also likely reflects the  special motivations of the buyer, said David Baker, commercial reappraisal manager for Shelby County Assessor Cheyenne Johnson.

The relatively few parcels that have been available for sale recently in the same area along Poplar have changed hands for prices in the upper $20s per square foot, he said.

“I haven’t tracked that,” Baker said, “but $76 a square foot, that’s probably going to be one of the higher ones if not the highest in the county… That’s kind of in the outer space realm.”

Appraisers would likely identify the Kroger transaction as a “qualified sale,” Baker said. Special conditions or motivations of the buyer explain a price that the existing market otherwise would not generate.

As an adjacent property owner wanting to establish its own fuel center, Kroger may have had extra motivation to pay a higher-than-normal price, Baker indicated.

Kroger purchased the property from Desiana Properties, a Burger King franchise.