Net Lease Investors Head for Secondary and Tertiary Markets

Mariano’s in Elmhurst, IL, recently sold for $25 million, one of the more significant net lease retail transactions in 2016.

CHICAGO—Investors have found net lease properties quite attractive during the past two or three years, but the amount of money flowing into the sector declined significantly in the first six months of 2016. That was the conclusion of researchers from JLL, who just issued an investment outlook report on the subject. Using data from Real Capital Analytics and CoStar on transactions larger than $5 million, they found that investors purchased $18.8 billion of net lease assets by mid-year 2016, a 36.8% decline from the same period in 2015.      

However, this decline seems like a return to normalcy after several years with extraordinarily high levels of activity. The office market has led the way so far in 2016, with $8.6 billion in sales, followed by industrial properties at $5.6 billion, with retail in third at $4.5 billion.