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| Sheree Strome |
ATLANTA, GA (Oct. 7, 2013) – Single
tenant net lease properties are the perfect solution for investors who are
interested in owning real estate without having the responsibilities of a
landlord. While interest rates are low, many believe now is the perfect time
for investors to snatch up these properties.
Those were a few of the points made during the most recent episode
of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of
Bull Realty. Bull and his guests discussed sales velocity, what buyers look for
and cap rates.
“Over the next 18 months, we anticipate $15 billion in new product
hitting the market,” said Geoffrey Linden, vice president of
acquisitions for Agree Realty Corp.
Although supply isn’t as robust as it was
in 2006, new, high-quality product coming online means single tenant net lease
properties should continue to be a popular investment, he added.
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| Karen Hutton |
Dollar stores, drug stores and quick service restaurants are among
the most popular products for sale, and all three experienced an increase in
sales velocity during the past 12 months, said Sheree Strome, vice
president of the national net lease investment group at Bull Realty.
For dollar stores, velocity jumped 23 percent, she said. Drug
stores climbed 10 percent and quick service restaurants increased by 40
percent. “Buyers like credit tenants, good locations, triple net leases and
rent increases for quick service restaurants,” Strome added.
Cap rates have continued to fall, especially for triple net,
15-year leases, Strome said. Cap rates depend on a variety of factors,
including the kind of tenant, lease terms, location and demographics.
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| Geoffrey Linden |
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parts stores tend to have cap rates between 6 and 7 percent, while drug stores
are lower at 5 to 6 percent, she added. Dollar stores fall in the middle at
around 6.5 to 7 percent.
With interest rates expected to rise, the effect on cap rates
remains unknown. “We’ve all enjoyed historically low cap rates and while
interest rates will creep up over the next year, I don’t really see cap rates
following rapidly behind them,” said Karen Hutton, CEO of The Hutton
Cos.
However, Linden stated the opposite.
“In net lease, we have long-term leases with fixed rental rates so we aren’t
able to monetize on the improving economy,” Linden said. “The only way to keep
up with other investment classes will be for cap rates to rise as well.”
The entire episode on single tenant net lease investment
properties is available for download at www.CREshow.com.
The next “Commercial Real Estate Show” will be available on Oct. 10 and will
examine the rebirth of the housing market.
For a complete copy of the company’s news release, please contact:
Stephen Ursery
The Wilbert Group
404.405.2354
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