Dollar Store Cap Rates Take a Plunge

CHICAGO—The economic recession brought big changes to American retail. It hit middle-market stores hard, but many outlets serving cost-cutting consumers thrived, and investors continue to buy up the growing number of dollar stores, according to a new research report. The Boulder Group, a net lease investment brokerage firm located in suburban Chicago, found that cap rates for the top net leased dollar store brands have fallen even further since the third quarter of last year.

“They trade at a premium compared to other properties because the lease terms are ten years or more, you have investment grade tenants, and the price points work well for small investors,” Randy Blankstein, president of Boulder, tells GlobeSt.com. Typically, investors can buy the top dollar stores for between $1.1 million and $1.5 million.