Net Lease Stays Steady
Shopping Center Business, May 2018 – Commercial real estate investors navigating today’s market are con-fronting a number of economic and policy variables that did not exist a mere six months ago. Tax reform and recent job gains have buoyed optimism about growth. But higher interest rates, a volatile stock market teetering near all-time highs, and possible tariff policies that could spark a trade war are generating anxiety. The dynamics dented single-tenant net lease investment activity early this year. But brokers fully expect to stay busy, and they do not foresee capitalization rates rising significantly, if at all, especially on core properties and locations. An abundance of private and institutional buyers are still demanding the bond-like properties that house dollar stores, pharmacies, quick service restaurants and other operators, many of which are considered largely resistant to the disruption of eCommerce. Meanwhile, net lease tenants that have been hurt by online shopping — namely big box operators — are looking at creative strategies to simultaneously increase traffic and trim their footprints.