by Michael R. Koch, Investment Advisor – Carter Retail Investment Sales Group
ATLANTA (June 23, 2010) – With a good deal of uncertainty in the retail investment sales market, single-tenant net lease properties are seeing a rise in demand as investors capitalize on their stability and price advantages. High-net-worth, private investors make up the majority of the buyers of single tenant retail properties due to the fact that their leases usually have longer terms and they provide returns that outweigh comparative investment vehicles. Single tenant deals are also easier to finance.
During the first quarter of 2010, the number of single tenant retail property transactions soared, seeing a significant year-over-year increase in volume for deals in 2010. Additionally, activity on single tenant deals have not experienced nearly as much of a decline as on their multi-tenant counterpart.
Investors have been keen on properties in primary markets with tenants such as major drugstore chains CVS and Walgreens, nationally recognized quick-service restaurants, and dollar store conglomerates Dollar General and Family Dollar.
Over the past year, cap rates have increased about 100 basis points on single-tenant retail assets secured under long-term, bond-like, corporate leases. However, in the second quarter of 2010, this trend has been continuing downward, turning hesitant investors into legitimate buyers of these properties.
Michael Koch is a member of the Retail Investment Sales Group at Carter. His area of expertise is in selling single-tenant retail properties and portfolios nationwide. Michael has direct access to the most current and critical market information and is dedicated to fully understanding and exceeding the needs of his clients by using a disciplined and thorough approach to each transaction.