LAS VEGAS—“Business has been incredible.” So says Harold Briggs, executive managing director of Stan Johnson Co., in a statement of undeniable confidence. He reports that the net lease business is up 15% year-over-year and that his shop is outpacing even that. But why? There are a number of factors, as he explains to GlobeSt.com in this exclusive interview from the show floor of RECon 2014. Not the least of these is hungry investors—some of them new to the playing field—but all of them piling on.

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Q: As the multi-tenant investment market recovers, how is it affecting the velocity of single-tenant net lease deals?

A: You know, the space has been incredible. The industry is up probably 15% year-over-year and our business is up even more than that. We're up probably 20% year-over-year and our pipeline is even stronger. We're probably up 60, 65%. Deal flow has been incredible across the board.

Q: Talk about the investment competition and how it's impacting pricing.

A: The biggest thing is that there's a limited supply of product and just a ton of interest. The international community has been very strong and the institutions continue to raise funds at a record level. In fact, that's probably our biggest client base. We've seen 1031 investors as strong as we've ever seen them, and another big piece is private capital. There's a lot of private money out there that can't get yield in any other space. The alternative investments aren't that attractive, so you get private capital just trying to chase yield and coming to this space to find it.

(See the full video interview at the end of this story.) 

Q: Brandon Duff of your organization was in a GlobeSt.com interview recently and he referenced a new age of fresh-faced investor.  What are you seeing?

A: Brandon was probably referring to some of our private capital. We've seen some interesting players. We've had a game-show host buy a property, we've had a professional tennis player and a couple of football players. It's fun to work with some big names who wouldn't traditionally be real estate investors.

Q: What does the future hold?

A: All of us think interest rates have to rise. Traditionally when interest rates rise, cap rates follow. But right now there's such a shortage of product, especially quality product, and such increased demand. Plus, when you look at debt spreads over traditional spreads let's say 2007, 2008, we think there's room for some compression there.

Q: We've heard a lot about non-traditional tenants coming into the space. True?

A: Our traditional tenants have been very strong. But because there's such a limited supply in the market right now, we're seeing some creative options, everything from movie theaters to auto dealerships. We're doing a lot of specialty grocers and convenience stores and some sale-leaseback. That mid-market sale-leaseback space is extremely hot. Again, there's not a lot of product out there and that brings an interesting tenant mix to the space, maybe not household names, but good credit and very good, attractive product for the investment community, and it's being well-received.

Q: So basically there's a positive outlook heading into 2015? 

A: We love the market right now. It's just as good as it's ever been. As a broker, you're always concerned about the future, but right now it's just a strong, strong market. We're very bullish about the future and we can't wait to see 2015 and beyond.

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