National asking cap rates in the single-tenant auto sector decreased to 5.89% in the fourth quarter of 2020, according to The Boulder Group’s 2020 Net Lease Auto Report. This represented a 48-basis-point decrease year over year.
Randy Blankstein, president, The Boulder Group , attributed the “substantial decrease” in cap rates to “an increase in supply of new construction properties with longer-term leases.” The new development supply was primarily concentrated in the service and collision sectors as these tenants continue expanding their footprints nationally.
In recent years, new store development for the auto parts sector has lagged historical standards, limiting the supply of long-term leased properties. The median term remaining in the sector was less than eight years as of Q4.
“Accordingly, many net lease investors shifted their focus to the service and collision sectors which have been underweighted in investors’ portfolios historically,” said Jimmy Goodman, partner, The Boulder Group.
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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