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Single-Tenant Big Box Cap Rates Compress by 50 BPs
National asking cap rates in the single-tenant big box net lease sector decreased to 6.25% in the fourth quarter of 2021, according to The Boulder Group’s 2021 Net Lease Big Box Report. This represented a 50-basis-point decrease from the year-ago period.
“The decrease in cap rates can be primarily attributed to increased activity in the big box sector from substantial amounts of capital targeting this sector, particularly institutional investors,” said Randy Blankstein, president, The Boulder Group. “Once the economy began to recover from the initial pandemic, activity within the sector increased.”
Throughout 2021, big box investors became more comfortable with non-essential retailers. Accordingly, the spread between investment grade and non-investment grade bog box retailers shrunk to 90 bps from 105 bps.
“Following the surge in demand for essential and investment grade retailers in 2020, the supply of these assets was limited in 2021,” said Jimmy Goodman, partner, The Boulder Group.
However, SVP John Feeney added, “Despite the positive investor sentiment for the big box sector, these properties are still priced at a discount to the overall net lease retail market.” That discount was 37 bps in Q4.
- ◦Sale/Acquisition
