Nationally, net lease activity is declining. As prices increase and fewer opportunities come to the market, net lease activity fell in the second quarter. In Los Angeles, however, it is a different story. Capital is increasing its attention on the net lease sector, according to Matt Berres, SVP at JLL, who says that investors are most focused on industrial net leased assets. With the Los Angeles market performing differently than the national markets, we sat down with Berres for an exclusive interview to get a closer look at the market. Here, he tells us the net lease asset classes in the highest demand, why investors have become more selective and why there continues to be a strong appetite for net lease deals in Los Angeles.

GlobeSt.com: Looking at the L.A. market specifically, have you seen net lease activity decline as it has on the national level?

Berres: As pricing and opportunities have started to plateau, varied sources of capital are increasing their focus on the net lease sector. This has sustained momentum, with volumes stable and cap rates maintaining compression. A continued strong appetite from foreign and institutional investors is providing buoyancy for sales volumes, which is especially true in Los Angeles as we continue to see robust demand given its high barrier to entry and overall real estate fundamentals compared to a national level. The lack of new development with new long term leases offer continued competition amongst 1031 exchange buyers, family office and public/private traded net lease REITS for example.