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November 2013 Net Lease Trend Report

As 2013 draws to a close cap rate increases have been observed in many net lease sectors.

By Jonathan Hipp | Updated on November 07, 2013

As 2013 draws to a close cap rate increases have been observed in many net lease sectors. While historically cap rates still remain low – it looks like overall they are beginning to slide upwards. In many ways the 2013 net lease market has been the tale of two cities. High quality net lease properties featuring long leases, credit tenants (Walgreens, 7-Eleven, McDonald’s etc)  and prime locations continue to sell at record low cap rates – these Grade A properties are in-fact still witnessing cap rate compression. However, there are simply not many of these prime net lease assets on the market – construction halted during the recession and is only now beginning to break ground. As a result, many investors are comprising on certain criteria – lease terms, location, credit rating etc. – in order to procure a higher cap rate return. Due to the higher amount of these transactions being performed today, cap rates have overall trended upwards.

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