CHICAGO— The demand for single-tenant net-leased properties has outstripped the supply and brokers across the country have seen the results all year. In Chicago, for example, The Mansour Group of Marcus & Millichap, a net-lease specialist led by San Diego-based Alvin Mansour, just completed the sale of a Chipotle net-leased property located southeast of downtown Chicago before the restaurant was even finished.

“That is a bit unusual,” says Mansour, but “with especially high-quality inventory like this, a lack of supply has led to more buyers willing to close even before the outlet opens.” The company does about 50 to 100 net-lease deals per year, he adds, and in every region of the country, “in terms of demand and pricing, this is the strongest we have seen the net-lease market in the last decade.”

The seller of this Chipotle, located at 1150 S. Clinton, was a Chicago-based developer and the buyer was an out-of-state private 1031 investor represented by Mansour. And although the restaurant does sit in an enviable location just outside the University of Illinois at Chicago in a neighborhood increasingly populated by high-income residents and new developments, that only partially explains its desirability.

"Overall property supply across the entire net lease sector decreased by more than 17% from the fourth quarter of 2012 to the first quarter of 2013," according to an April research report published by The Boulder Group, an investment brokerage firm located in suburban Northbrook. And although the firm's second quarter report showed that this trend reversed, with the overall supply increasing 14%, much of that was not due to new construction, but from owners adding vintage buildings to the market or cutting shopping centers into single-tenant parcels.

Boulder also found that the cap rates for retail and office properties have gone down to levels not seen since 2006, with retail properties remaining the most sought after sector. Their average rates hit 7%, a decline of 25 basis points since the first quarter.

Mansour says that this Chipotle had a cap rate of only 5%, and in California, some of the most desirable properties have sunk even lower. However, he expects that this trend will soon begin to reverse. “Assuming nothing crazy happens,” cap rates in general should creep up about 50 bps in the next 24 months. “The pipeline is building up; a lot of new developments are coming out of the ground,” and in 2014, the increasing supply should begin to loosen the market.