Are Net Lease Investors Compromising Quality?

ORLANDO—More cashing out. More competition. More compression on cap rates. Those are a few of the ways the net lease market has changed since this time last year. Foreign investors are making their mark, build-to-suit is back in vogue and new challenges are emerging that could change market dynamics in the months ahead.

The net lease retail market entered 2015 on mixed footing. Low oil prices are hampering earnings at gas stations and extra income in consumers’ pockets is being redirected to other purchases, according to Marcus & Millichap‘s Net-Leased Retail Research Report. The firm predicted investors executing 1031 exchanges will dominate the net lease market in 2015 as retiring Baby Boomers take advantage of record-low cap rates in the apartment market.