Net-Lease Investments Return to Near Pre-COVID Levels
Investment in U.S. net-lease properties was close to pre-pandemic levels in first quarter 2021, driven by robust institutional acquisition activity and increased interest in office assets as return-to-the-workplace plans gained momentum. This is despite COVID-19 related international travel restrictions and resilient foreign investment, according to the latest research from CBRE.
While net lease investment activity (comprising office, industrial and retail properties) decreased by 2.6 percent year-over-year in first quarter 2021 to $14.3 billion, volume was up by 10 percent from pre-pandemic first quarter 2019. The decline for total U.S. commercial real estate volume in first quarter 2021 was deeper, at 18.3 percent year-over-year.
Los Angeles and Orange County placed among the top 20 markets for total net-lease investments in the first quarter with Los Angeles in the second spot and the OC in 18th place. In Orange County, first quarter net-lease property investments increased 1.7 percent year-over-year to $223 million. Orange County investment volume in the industrial sector nearly doubled to $191 million.
“We continue to see strong demand for assets that are in superb strategic locations with one or two high-quality tenants to provide stability during uncertain times,” said Anthony DeLorenzo, CBRE EVP. “In-place net leases diminish or even erase substantial economic risks while providing exceptional ease of ownership and long-term stable cash flow. Recent transactions demonstrate substantial demand for these types of investments from 1031 Exchange buyers. With potential tax changes underway, these investors are pushing even more money into the space right now.”