2020 Net Lease Retail Sales Volume & Cap Rates

Single-tenant retail sales volume versus average cap rates, updated quarterly.
Source: Stan Johnson Co. Research, Real Capital Analytics
Source: Stan Johnson Co. Research, Real Capital Analytics

The single-tenant net lease retail sector reported strong and significant activity during much of 2019, including posting a record high $6.1 billion of investment sales during Q2 2019. Unfortunately, that level of demand was not able to be sustained going into 2020, as the first three months of the year saw the retail sector post its slowest quarter of activity since the start of 2013.

With only $2.4 billion in Q1 sales, the net lease retail sector will be unlikely to post annual totals that match recent years. In fact, depending on the duration of the current health crisis, the single-tenant retail market may be on track to post a sub-$10.0 billion year. Despite the volatility in the marketplace, net lease retail cap rates have remained virtually unchanged. Q1 2020 saw average cap rates increase a single basis point quarter-to-quarter, ending the period at 6.2 percent which is near the record low of 6.1 percent set in the latter half of 2016. Despite some upward movement since bottoming out, some regions of the country are still seeing incredibly low average cap rates, including the Northeast and West regions, which continue to report average rates between 5.7 and 5.8 percent.

Focusing on business development, industry- and client-specific research, and the analysis of local and national market trends, Lanie Beck has led Stan Johnson Co.’s research department since 2013 and has overseen corporate communications since 2018.

—Posted on May 22, 2020