Single Tenant NNN Leased Investment Market Remains Tight

Randolph J. Taylor MBA, CCIM, Broker
Coldwell Banker Commercial Naperville, IL


Institutional investors continue to capitalize on the competitive Single Tenant NNN Leased Investment market. The median capitalization rate for NNN properties, which has fallen steadily since 4Q11, reached 6.99 percent in the first quarter. Flush with capital, institutional investors have been able to leverage the spread between Treasuries and historically low cap rates to improve returns, according to the report.

Individual investors looking for NNN assets in the $1 million to $10 million range are in a more difficult position, the report says, given the lack of supply of low-cap-rate properties, competition from institutional investors, and limited options for 1031 exchanges.

Five of the six major quick-service restaurants tracked by NNN Advisors saw a drop in new for-sale offerings in 1Q13. Drug store properties experienced an across-the-board decline in new offerings, while CVS and Walgreens competed for the lowest average cap rate, ending the quarter at 6.91 percent and 6.74 percent respectively.

National Average Cap Rates by Product, 1Q13

Auto related: 7.42%

Bank: 6.12%

Convenience/gas: 5.79%

Discount store: 8.02%

Drugstore: 6.77%

Restaurant: 6.75% Newsletter - April 25th 2013
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