National + Net Lease | March 1, 2021

Cap rates on single-tenant retail and industrial properties compressed in Q4 2021.

Cap Rates Post “Substantial Decrease” in Single-Tenant Auto Parts Sector

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.

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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 13-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 15-20 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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