2020 Net Lease Retail Sales Volume & Cap Rates

After a very strong 2019, the single-tenant net lease retail sector has seen two consecutive quarters of declining investment sales volume.
Source: Stan Johnson Company Research, Real Capital Analytics; analysis includes sales greater than $2.5m
Source: Stan Johnson Company Research, Real Capital Analytics

After a very strong 2019, the single-tenant net lease retail sector has seen two consecutive quarters of declining investment sales volume. Year-to-date totals are just shy of $5.0 billion, putting the sector on pace to reach totals not seen since 2012. While deals continue to close and new supply is hitting the market at a record pace, we’re not likely to see substantial increases in sales volume in the second half of 2020, although investor demand is currently quite strong. Buyers in this environment are cautious though, and many are risk adverse, choosing to pursue only the highest quality assets in the best locations. Investor demand for non-essential retailers has dwindled, although strong credit tenants continue to trade despite their non-essential status. Even with the current marketplace volatility, net lease cap rates in the retail sector have held remarkably steady. We’ve seen virtually no movement in the last five years, and average cap rates ended mid-year 2020 at 6.2 percent–a meager three basis points below year-end 2015’s average.

Focusing on business development, industry and client-specific research, and the analysis of local and national market trends, Lanie Beck has been the Director of Research for Stan Johnson Co. since 2013.

—Posted on Aug. 21, 2020