The Real Deal Miami

In shaky retail market, investors eye single-tenant assets

March 24, 2010 03:18PM

Even amid a sluggish retail market, single-tenant net lease deals are on the rise nationwide as investors look to take advantage of their relatively inexpensive price points, industry experts say. Because single-tenant leases tend to be long-term and lower risk, lenders, too, are finding these kinds of acquisitions more attractive to finance. The result, thus far, has been a noticeable year-over-year increase in volume for deals of this type during the first quarter of 2010, plus a decline in cap rates for some of the most desirable properties. Granted, single-tenant assets didn’t suffer as much during the downturn to begin with. Total retail sales fell by 80 percent between mid-2007 and mid-2009, whereas sales of net lease properties declined by about half of that, according to Bernard Haddigan of Marcus & Millichap’s national retail group. Now that the market is beginning to recover, brokers say that investors are especially eyeing metro market properties that house drugstores like CVS and Walgreens, dollar stores and national bank branches.