Single-tenant retail activity is heating up. This year, the single-tenant retail market has been active, with several transactions breaking cap rate records. Jeremy McChesney, EVP of Hanley Investment Group Real Estate Advisors, recently closed three deals for single-tenant and two-tenant 7-Eleven properties in Los Angeles, San Diego and Bakersfield. In Los Angeles, the deal broke the record for the lowest recorded closing cap rate for a multi-tenant retail property. We sat down with McChesney for an exclusive interview to find out how investors are responding to the record-low cap rate environment. He says that in Southern California these retail properties are commodities, and investors know that they have to pay to play in the market. Here, he tells all about the trend for single-tenant retail.

GlobeSt.com: What are the pricing and cap rate trends for single-tenant retail properties in Los Angeles? How about two-tenant retail properties, like the one you sold in L.A.?

Jeremy McChesney: The most sought-after retail asset is a single-tenant asset with a high-credit rating, a long-term lease and in a desirable location. In Los Angeles, the demand for this type of high-quality asset remains very strong, especially for new construction. Investors will typically pay more for a single-tenant asset than they will for a multi-tenant property, depending on whether the two or more tenants are creditworthy. Potentially, with a two-tenant property, there can be some type of management that's required. For example, you have to divide up how the water and electricity are handled between the two tenants as well as the maintenance of the common area.