Single-Tenant Net Lease Properties in High Demand

Learn more about this rapidly growing sector.

While the commercial real estate market is characterized by uncertainty, single-tenant net lease properties remain attractive to investors.  This is because these properties have demonstrated a degree of risk-adjusted, recession-proof opportunity.  As a result of this demand, the single-tenant net lease sales volume is set to exceed last year’s sales record of $69.6 billion.  Curious to learn more about this leading sector?  Your commercial realty advisors report.

While single-tenant net lease sales have increased overall, industrial sales have led the pack with transactions adding up to $22.3 billion at the end of the third quarter.  Notably, major acquisitions by Blackstone Group have added up to $3.1 billion of the total industrial sales volume.

Experts point out that single-tenant net lease sales volume “is less driven by market (fundamentals) than by actual credit under the lease.”  The longer the lease and the stronger the credit, the lower the cap rate.  Because investors want a reliable source of revenue, they gravitate to these types of investments.

Southern California remains a top competitor in this sector as many assets are currently trading under 4%, down from the national industrial cap rate average of 6%.  These investors are expecting significant returns as rent growth for these assets in the Los Angeles basin has ranged from 8-10% for the last couple of years.

This is what you need to know about the increase in single-tenant net lease sales in the industrial sector.  Interested in staying up to date with the latest commercial real estate news?   If so, then contact the experts at California Commercial Realty Advisors, Inc.  Your commercial realty advisors are eager to assist you with all your real estate needs today.

Leave A Comment