There is an abundance of capital flooding into the net lease market, and some established players are concerned that new entrants are getting out over their skis, so to speak. "Never before has so much capital been deployed into industries undergoing extreme structural change," said Coler Yoakam, senior managing director of corporate finance and net lease platform leader at JLL, on the State of the Industry panel at the recent GlobeSt.com Net Lease conference.

The panelists discussed the arrival of new capital into the niche CRE sector that came with the pandemic last year. Daniel Taub, SVP and national director of the retail and net lease divisions at Marcus & Millichap, said that this isn't unusual, explaining that new capital finds its way into the sector every cycle. There is a short-term impact on pricing and cap rates as a result because these players are often less experienced in understanding the net lease sector, but yet attracted to the risk adjusted investment opportunity.

Yoakam said that the new players include separate accounts and sovereign wealth funds that were developing net lease business plans before the pandemic. During the pandemic, they became ramped up activity to the net lease sector, but Yoakam says they are relying on advisors to make targeted investment. That is a sign, he said, that capital is being methodical and measured.