Industrial Driving More Than Half of STNL Sales Volume
Retail is returning to its norm and office is well below what is typical.
The STNL market is relying heavily on industrial to drive sales, according to a new report from Colliers.
STNL saw recent rapid growth in capital allocations, which will take time to recalibrate, its new report said.
Industrial grabbed a 53% share of total STNL deals in the first half, well above its historical average, as investors focus on “the massive rent upside” of this asset class, Colliers wrote.
Acquiring short-term sale-leaseback deals with corporate owners looking to right-size their operations might become more appealing.
Meanwhile, retail is adjusting, getting back in line with its historical share.
“After a period of surging capital allocations as investors chased yield [in retail], a reset back to term and credit will take some time,” Colliers said. “This resulted in a slow start this year,” with just $2 billion invested in Q2, the lowest total since the start of 2012.”
Private capital investors can “take down stand-alone retail sites with relative ease,” Colliers said.
Office, however, is well below its norm, at just 17%, whereas over the past decade, office accounted for 34% of deal volume.
Long-term leased assets with minor rent bumps are not attracting high levels of capital today, Colliers said, and the “higher level of uncertainty around the office asset class” is not helping matters, volume-wise.
The overall buyer pool is shifting, with cross-border capital becoming a net buyer this year, the reverse from 2022’s net disposition statistics.
Investors in the STNL space, with less competition than they have had of late, will find intriguing acquisition opportunities.