Grocery stores are often thought of as recession-proof, much like dollar stores, because they sell the essential products we use daily. Recessions may cause consumers to cut back on luxury items and dining out, but people still have to eat and must buy the staples in good times and in bad.
Overall, cap rates for grocery stores have compressed from 7.93% in 2010 to 7.81% in 2011. The best grocery investments are located in a great location with ample parking, good demographics and growing neighborhoods. Popular national grocery chains such as Aldi, Safeway, Bloom, Food Lion, Harris Teeter, Publix’s, Whole Foods and Wegmans are among the most attractive to investors.
Grocery stores provide centers with better visibility; more foot traffic and a greater overall credibility which helps landlords retain other tenants. The surrounding area becomes more desirable for other retailers and so raises the success of the entire neighborhood. Vacancy rates can be lower and landlords often cash in on more stable rent streams being near grocery stores due to the day in/day out traffic.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
