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Dollar Store Cap Rates Narrow by 87 BPs Y-O-Y
National asking cap rates in the single tenant dollar store sector compressed to 6.11% in the second quarter, according to the Boulder Group’s 2021 Net Lease Market Report. This represented an 87-basis-point change from the year prior.
“Cap rates in the dollar store sector reached new historic low levels for Dollar General and Dollar Tree,” said Randy Blankstein, president, The Boulder Group.
According to the report, Dollar General cap rates compressed 115 bps to 5.75% while Dollar Tree compressed 53 bps to 6.50%. Family Dollar compressed 30 bps to 6.85%. Dollar General accounted for 82% of the dollar store supply on the market.
“Throughout the course of the COVID-19 pandemic, investor demand in the dollar store sector increased to record levels,” added Jimmy Goodman, partner, The Boulder Group.
The primary reason for the cap rate compression was a limited supply of new-construction properties with investment-grade tenants and long-term leases.
- ◦Sale/Acquisition
