NEW YORK CITY-More institutions, pension funds and non-traded REITs are expanding into the triple-net-lease arena in 2012, but as the capital flows into the space, competition for the best properties is heating up. Panelists at ALM Real Estate Media Group’s RealShare Net Lease 2012 conference agreed the NNN sector would continue to see action due to long-term leases, fixed rental growth and favorable cap rates, reflecting the state of today’s slow-growing economy.

“To some degree, net lease goes well when the market is kind of frothy,” said Paul McDowell, chairman of the board and CEO of CapLease Inc., addressing more than 250 attendees at the New York Marriott Marquis on Tuesday morning. “When the market bottoms out, we become sexy again.”

At the same time, the trend signals bigger concerns, as explained by keynote speaker Sam Chandan, president and chief economist of Chandan Economics. Chandan explained while spending is increasing, personal incomes are not – a trend that is presenting a challenge for bricks-and-mortar retailers, property owners and investors who depend on consumers to drive retail sales.