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National  + Net Lease  | 
New-construction stores leased by Dllar General and other brands saw the greatest cap rate compression in Q1 2022

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. 

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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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