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Big Box Retail Sees Jump in Cap Rates

CHICAGO—Researchers partly attribute this increase to investor concern about the future of soft good retailers.

chi-bigboxboulder Many people believe that Walmart, Target and Home Depot make up most of the big box sector, but junior big box tenants like Hobby Lobby, Goodwill and PetSmart made up the majority of the supply in the fourth quarter of 2016.

CHICAGO—The decision by Macy’s, The Limited, and other retailers to close outlets around the US has shaken up the world of retail. And with some experts predicting that many more outlets will close this year, investors are definitely taking notice.

Cap rates in the single tenant net lease big box retail sector rose 42 bps to 6.5% from the fourth quarter of 2015 to the fourth quarter of 2016, according to research just published by The Boulder Group, a net lease firm located in Northbrook, IL. The firm attributes this increase to investor concern about the future of soft good retailers and the evolving size of floorplates for big box retailers.

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Brian J. Rogal

Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.

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