Walgreen's

MIAMI—Although the single tenant real estate market is overly popular, who or what in our industry is actually thriving and being successful in this period of a declining cap rate yield curve is rarely discussed. So says David Sobelman, executive vice president of Calkain Companies.

In 2009, Sobelman was talking about the apparent high rate of attrition in the net lease brokerage community: Brokers couldn’t afford to be brokers, developers couldn’t develop, tenants shut down plans for new stores and closed existing locations. So what happened to everyone that hung in there and stuck it out? As Sobelman sees it, the cream has risen to the top.

“Developers of single tenant properties that stuck to what they knew, maintained and fostered existing relationships, and made people aware that they weren’t going anywhere fared extremely well when it became time to start building again,” Sobelman tells GlobeSt.com. “They had more opportunities to purchase land for new buildings or redeveloped vacant buildings.”

The development team may have become a little smaller with a lot more multitasking within their ranks, he says, but what it made them more efficient service providers. Developers realized collective thinking and pooled efforts of fewer people made each project more manageable for any specific property, he explains, and found that scale was important and it was unique to each property.  

“The same rings true for brokers that made sure their clients—and anyone else that would listen—know that they are the epitome of professionalism and have the ability to procure transactions even when people aren’t seeking them,” Sobelman says. “Brokers that have maintained and even increased their presence during the depths of the recession are typically those that are now extremely noticeable by both investors and landlords.”

There was indeed a time when anyone with a computer and a half-hearted attempt at a website could make a decent living by “slinging” property flyers around the internet with the hopes of getting a portion of some fee that they really didn’t control. Sobelman remembers it well, but now property owners are vetting their brokers and, again, the cream is rising to the top.

“Corporations, which will ultimately become tenants in various built-to-suit properties, are of the same ilk,” Sobelman says. “Those companies that decided that they could take advantage of some depressed market pricing and restarted their develop programs when others were still analyzing the macroeconomic conditions of the world have also fared well.”

He points to Walgreens, CVS, Chase Bank, TD Bank, McDonalds, Dollar General, Family Dollar, Wawa, and 7-Eleven as examples of brands that have taken what many thought as a stagnant development period and turned it to their benefit. The common thread with these companies is not that they went against common thought when and if they should develop new locations he says, but that they all have an investment grade credit rating by Standard & Poors or Moodys. And that, he says, is far from a coincidence.

“Overall, what was once a highly segmented industry and one where a few dollars or a real estate license could get you in the net lease game, today’s market is forcing professionals and entities to exploit their merits in order to set themselves apart from lesser known or experienced providers,” Sobelman says. “The cream always goes on top of pie.”