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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 from 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.”

For comments, questions or concerns, please contact Paul Bubny

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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