CHICAGO—The economic recession may have hit middle-market stores hard, but outlets serving cost-cutting consumers thrived, and competition among investors to buy up the nation's supply of dollar stores has continued to heat up, 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 last year.

In its report, Boulder analyzes transactions involving free standing Dollar General, Dollar Tree and Family Dollar properties, as these tenants represent the largest presence within the sector. Since the second quarter of 2014, the average rate has compressed to just 6.5%, a decline of 50 bps. The most significant change occurred among Family Dollar properties, which saw a 100 bps decline, much larger than Dollar General and Dollar Tree, which experienced only slight compression of 25 and 10 bps respectively.

“Family Dollar changed their lease to be more competitive with Dollar General,” Randy Blankstein, president of Boulder, tells GlobeSt.com. “Formerly, new construction Family Dollar leases were 10 years, double net and did not contain rental escalations in the primary term.” But the new standard lease is 15 years, triple net and contains a series of rental escalations, making the properties more attractive to investors.