Elon Musk Might Like This: Tesla Showroom Sells Online

B+E’s New Digital 1031 Exchange Facilitates Quick Sale
B+E brokered an online 1031 exchange for a Tesla showroom and service center in Highland Park, Illinois. Photo: B+E
B+E brokered an online 1031 exchange for a Tesla showroom and service center in Highland Park, Illinois. Photo: B+E

In a juxtaposition that might be germane to the mercurial Elon Musk’s Tesla marketing strategy, a sales-and-service office for his electric car brand in suburban Chicago was sold through an online trading exchange.

The sale comes only three months after Musk announced that he was putting the brakes on showroom sales in favor of an online-only model, noting in a tweet that it only “takes 1 minute” to buy a Tesla via the internet.

He subsequently softened that decision by announcing he would only close some of the showrooms based on lease expirations, recognizing the value of a consumer’s ability to touch, feel and drive the cars ahead of purchase.

So to have one of the showrooms sell through a new digital 1031 exchange trading platform seems a fitting tribute to his notions of marketing and sales. The 52,000-square-foot, two-story building at 1200 Old Skokie Valley Road in Highland Park, Illinois, traded hands through 1031Trade, recently launched by B+E, an online net lease investment brokerage with offices in New York; Chicago; Atlanta; Tampa, Florida; and San Francisco.

Chicago real estate investment and management firm Berger Asset Management sold the property for $8.75 million to Kam Development, a Hawaii-based commercial real estate firm with offices in Oak Park, Illinois, after assembling several parcels and developing the site in 2013. B+E’s platform facilitates quick property tracking for buyers looking to take advantage of the IRS Section 1031 code that allows for a tax-deferred exchange on like-kind property.

The property is anchored by a 32,000-square-foot Tesla showroom, with sports training center Bystol Performance Center occupying the remaining 20,000 square feet. The net lease retail property carries a projected rate of return of 6.8%, with five-plus years remaining on the Tesla lease, according to B+E.

“This was an interesting and dynamic redevelopment opportunity,” said Jonathan Berger, the founder of Berger Asset Management, in a statement. “While one of our original concepts was a self-storage development, the interest from and opportunity to work with Tesla ultimately made the most sense and created the most value for our investment.”

For the record:

Joshua Silverglade of The Equitable Group of Cos. represented Berger Asset Management in the sale.

For more information on the transaction, please see CoStar Comp #4788014.