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Lending Slows Retail Sales Velocity

ATLANTA-Single and multi-tenant deals are down substantially over the past year.

By Carl Cronan | Updated on June 26, 2008

ATLANTA-Continued conservative lending is putting a damper on deal velocity in the local retail sector, according to a new research report by Marcus & Millichap. At the same time, retail market conditions are expected to soften throughout this year because of the unstable housing market and continued development activity.

Sales of multi-tenant retail assets are off by 44% over the past year, while single-tenant transactions have fallen 33% since the midpoint of 2007. However, the report states that cap rates for fast-food properties, particularly those with strong national tenants, have increased slightly over the year to around 7%.

“Fast-food properties are expected to remain the single-tenant asset of choice for investors,” says John Leonard, Marcus & Millichap’s regional manager in Atlanta. “Cap rates for all single-tenant assets will likely continue to be fairly stable this year despite the drop off in velocity.”

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