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National   /   February 1, 2021

Paul Bubny
By: Paul Bubny

Cap Rates Compress for Single-Tenant Big-Box Assets

Asking cap rates in the single-tenant big-box sector decreased to 6.75% in 2020’s fourth quarter, according to the Boulder Group’s 2020 Net Lease Big Box Report. This represented a 25-basis point decrease year over year.

“The decrease in cap rates can be primarily attributed an increased appetite from investors for big-box tenants that operate in the essential business category such as grocery-related and home improvement,” said Randy Blankstein, president, The Boulder Group.

Despite the headlines surrounding retail and COVID-19; demand for big-box retail assets was strong for specific tenants. Investment-grade tenants within essential and operating businesses experienced increased demand both private and institutional investors.

“The grocery sector was the winner during the pandemic in addition to other retailers including Walmart, Costco, Target, Home Depot and Lowe’s,” added Boulder Group partner Jimmy Goodman. In Q4, “properties with grocery-related tenancy accounted for more than 30% of the market.”

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Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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