Investors are still clamoring for newly built, freestanding retail properties with long-term leases to national credit tenants, but the supply of such assets tightened in the first quarter, according to brokerage firm The Boulder Group. The national median spread between asking cap rate and closed cap rate for single-tenant, net-lease retail properties was 26 basis points in the first quarter, up by three points from the previous quarter, the firm reports. Roughly 3,800 such properties were on the market during the first quarter, down by 2.9 percent from the fourth quarter.
Net-lease property investors are most interested in tenants they perceive to be e-commerce-resistant and experiential, according to John Feeney, a Boulder Group senior vice president. Among these are “medtail” (medical facilities in locations traditionally used for retail), food, fitness, entertainment and convenience tenants, Feeney says. The supply of high-quality assets remains limited, however, especially for properties valued at greater than $7 million. Most of the newly constructed supply in the net-lease space, Feeney says, remains fairly dense with dollar store, quick-serve restaurant and medtail tenants.
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Supply of top-quality net-lease properties tightening