When Will Rates Stabilize in Single Tenant Net Lease?
In preparation for our upcoming RealShare Net Lease West conference next week in Downtown L.A., we recently chatted with Lanie Rea, director of research at Stan Johnson Co. on all things net lease based on the firm’s Q3 market overview report.
In part 1 of this two-part interview, she talked about what surprised her about the firm’s third quarter stats for the single tenant net lease investment market and why sales volume was down on all product types in the third quarter among other things. In part two, we talk with her about construction starts and deliveries and what will be a hot topic in 2016.
GlobeSt.com: How is construction activity across all product types impacting the single tenant net lease investment market?
Lanie Rea: Construction starts haven’t necessarily kept up with deliveries this year, so we’ve actually seen a decrease in under construction totals across the three property types. However, development levels continue to be robust, and we expect to see buyers remain interested in high-quality, new developments as they come to market. Simply put, construction activity means more supply.
GlobeSt.com: What is the biggest trend in single tenant net lease investment that you will be watching in 2016?
Rea: Average cap rates will likely be a hot topic in 2016. The single-tenant market has seen record low averages across all property sectors, and there is no indication that rates won’t fall further before the end of the year. The questions remaining are when will we see rates stabilize, and how long will they remain at record lows before going back up.
Published in GlobeSt