Monthly Net Lease Trend Report
Net Lease retail cap rates compressed across all sectors in November. This step down in cap rates is part of a cyclical trend seen annually - more investment activity naturally occurs at years end, increasing demand and lowering cap rates. Some of the bolder drops occurred in Pharmacies (6.92% to 6.06%) and C-Stores (6.60% to 6.23%). Both of those sectors feature high credit tenants such as Walgreens, CVS and 7-Eleven which are among the highest demanded by net lease investors.
Overall, 2013 saw cap rate compression generally halt and that trend is expected to continue in 2014 with higher interest rates causing cap rates to slide upward. This end of year decrease is due to natural market dynamics.
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