CHICAGO—E-commerce may have hit many retailers hard, but some, at least from an investment standpoint, have seen benefits. Investors keep gravitating towards the quick service restaurant sector, pushing its median cap rate below other kinds of retail outlets. In the second quarter of 2017, the rate fell to just 5.56%, a 14 bp decline when compared to the prior year, according to a new study by the Boulder Group, a net lease firm in Northbrook, IL. Corporate leased QSR properties were more popular. Cap rates for that subsector decreased by 10 bps to 5.35% while franchise properties declined by 5 bps to 5.75% cap rate.
The decline among QSR properties is happening at the same time cap rates have finally started to increase across the overall single tenant net lease sector. Earlier this year, after a six-year slide to historic lows, retail cap rates increased to 6.23%. “Investors continue to target the QSR sector as it is e-commerce resistant and is a popular alternative for 1031 investors when compared to other low priced net lease properties,” according to the report.
“The QSR sector should slightly outperform the overall retail net lease sector in the near to medium term,” Randy Blankstein, president of Boulder, tells GlobeSt.com.
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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.
