Net Lease: Recap and Forecast
Net leased properties are among the hottest sectors of commercial real estate. With 2010 ending on a
high note, all signs are pointing to a positive 2011.
Randall Shearin
One of the healthiest sectors in commercial real estate remains triple-net leased retail properties. Drug stores,
banks, auto parts stores, discount retail stores and restaurants built and leased on a triple-net basis remain popular with private investors and funds, and both groups are keeping demand incredibly strong in the sector.
Build-to-suit developers, investment funds, corporate sale-leasebacks and franchise sale-leasebacks continue to feed buyers’ appetites, says Barry Silver, principal of San Rafael, California-based The Silver Group. During the second half of 2011, and especially so in the fourth quarter as fears loomed about future tax issues, buyers came on strong, compressing cap rates on triple-net properties. In December 2010, Marcus & Millichap’s Mark Theil acquired a Walgreens under construction in Hollywood, California, on behalf of a client who paid $10.71 million for the 7,830-square-foot property, making it the highest priced per square foot deal for a single tenant net leased drugstore in 2010. That year-end sale is a good milestone for a quarter that has been good to the net lease sector.
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banks, auto parts stores, discount retail stores and restaurants built and leased on a triple-net basis remain popular with private investors and funds, and both groups are keeping demand incredibly strong in the sector.
Build-to-suit developers, investment funds, corporate sale-leasebacks and franchise sale-leasebacks continue to feed buyers’ appetites, says Barry Silver, principal of San Rafael, California-based The Silver Group. During the second half of 2011, and especially so in the fourth quarter as fears loomed about future tax issues, buyers came on strong, compressing cap rates on triple-net properties. In December 2010, Marcus & Millichap’s Mark Theil acquired a Walgreens under construction in Hollywood, California, on behalf of a client who paid $10.71 million for the 7,830-square-foot property, making it the highest priced per square foot deal for a single tenant net leased drugstore in 2010. That year-end sale is a good milestone for a quarter that has been good to the net lease sector.
