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Single-Tenant QSR Cap Rates Compress as Drive-Thru Demand Surges
National asking cap rates in the single-tenant quick service restaurant (QSR) sector decreased to a new historic low of 5.26% in the second quarter, according to The Boulder Group’s 2021 Net Lease QSR Market Report. This represented a 39-basis-point decrease from a year ago.
“Cap rates for corporate leased QSR properties declined by 20 bps to 5.00% while QSR properties leased to franchisees declined by 43 bps to 5.40%,” says Randy Blankstein, president, The Boulder Group. “The primary contributing factor to the decline in cap rates is related to the increased investor demand for net lease properties with a drive-thru component.”
Demand for net lease QSR properties outpaced the overall net lease sector in the past 12 months. The premium associated with net lease QSR properties was 76 bps in Q2 compared to the prior year’s 60 bps.
“Following the loosening of in-person dining restrictions related to COVID-19, properties with drive-thru still continue to command significant investor demand,” said Jimmy Goodman, partner, The Boulder Group.
- ◦Sale/Acquisition
