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QSR Sector Grows More Appealing

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.

By Brian J. Rogal | brianjrogal | Updated on September 05, 2017

chi-qsr (2) Investors keep gravitating towards the quick service restaurant sector, pushing its median cap rate below other kinds of retail outlets.

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.

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