Strong demand from 1031 and private investors pushed cap rates for the single tenant net lease retail sector down slightly to just 6.1%, another historic low, in the third quarter of 2016, according to a new report from the Boulder Group, a net lease investment firm in suburban Chicago. Retail cap rates have stayed below 6.65% since early 2015.
“The uncertainty of traditional investment asset classes coupled with the stable yields generated by the single tenant sector has created an abundance of investor demand for this sector,” Boulder says. The number of retail properties on the market increased slightly, from 3,310 to 3,353, but there remains a lack of new construction properties with long term leases.. . . more