Single-tenant retail property prices hit all time high: Report

Publish Date: April 07, 2016

Cap rates for the single-tenant net-lease retail sector hit a historic low rate of 6.18 percent in the first quarter, according to Boulder Group’s quarterly survey. The spread between asking and closed cap rates on such properties was 24 basis points, up by 1 point from the previous quarter, the firm reports. Interest from private and 1031 exchange buyers is helping the retail segment outperform offices and industrial properties, says John Feeney, a vice president at the firm. “Private and 1031 buyers are more familiar with retail tenants, prefer the lower price points and understand the general business practices of these tenants when compared to industrial or office tenants,” he said in the firm’s report. Meanwhile, the pipeline of new single-tenant properties under construction continues to tighten, keeping cap rates low. Overall supply of the net-lease sector declined by about 3 percent in the first quarter, compared with the quarter before. There were 3,209 single-tenant net-lease retail properties on the market, off by 1 percent from the previous quarter. “New-construction properties are in the highest demand amongst 1031 and private buyers,” Feeney said, “as they typically have the longest lease term.”

Download the full report here.