CHICAGO—Investors have been pouring money into the single tenant net lease market, pushing down cap rates to historic lows, and demand for quick service restaurants, both corporate owned and franchisees, has accelerated in the past year, according to a new study by the Boulder Group, a commercial real estate firm in suburban Chicago.
“Buyers are moving past core metros in search of higher yield,” Randy Blankstein, president of Boulder, tells GlobeSt.com, and “the surge in QSR demand is causing more tenants to enter sale leasebacks to take advantage of current market pricing.”
Cap rates in the QSR sector sank to 5.9% in the second quarter of 2015 for properties leased to franchisees, a 35 bps decline since last year. And corporate leased QSR properties saw a 10 bps decline during the same time period. Unlike other net lease retail sectors, franchisees lease the majority of QSRs, and although investors typically prefer the corporate-guaranteed outlets, the cap rate spread between corporate and franchisee properties compressed from 50 to 30 bps in the second quarter.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
