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Investors Still Have Appetite For Grocers

'Today the more popular net lease investment is the fast food category, and then I would say the grocery stores, depending on where they're located.'

By Michelle Napoli | Updated on April 23, 2009

Grocery stores are among the more popular net lease retail investments these days. Sales of single-tenant grocery store properties were down 17% in 2008, according to the recent Single-Tenant Outlook retail report from the research services team of Marcus & Millichap Real Estate Investment Services Inc. While a decline, that figure is not nearly as steep as the overall decline in commercial real estate transactions last year, or in the broader net lease marketplace for that matter.

“Today the more popular net lease investment is the fast food category, and then I would say the grocery stores–depending on where they’re located and their sales–are also appealing,” says Edward B. Hanley, president of Irvine, CA-based Hanley Investment Group Real Estate Advisors.

Hanley recently represented both the seller, developer MV Investors Inc., and the buyer, Los Angeles-based limited partnership Downtown Gateway, of a Fresh & Easy Neighborhood Market store in Loma Linda, CA. The winning bid among six offers for the newly built 15,000-square-foot property was a purchase price of almost $2.87 million, representing a 6.6% cap rate.

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