TULSA, OK—Ken Hedrick, senior director at Stan Johnson Co., recently caught up with GlobeSt.com’s Natalie Dolce on net lease retail. According to Hedrick, net lease retail is looking very strong after the first quarter this year.
“We have seen our retail listings move at a rapid pace in today’s market. We have access to new build-to-suit properties and retail assets that recently extended their lease,” he says. “There is an abundance of capital trying to acquire net lease retail properties today and we see this trend continuing throughout 2014.”
When asked what types of properties have the most investor activity, he says that “All net lease properties with 10-plus of term and credit are seeing great activity. There is a simply supply/demand curve that is playing out in today’s market.”
According to Hedrick, “We have a large amount of capital that is chasing a shortage of investment grade assets with term. This is keeping cap rates at a fairly consistent level and we expect to maintain that trend in 2014.”
The economy has impacted some specific tenants like Best Buy, Walgreens etc…that have announced some store closings, he says, but “In most cases, tenants have closed underperforming stores but are continuing to grow through new build-to-suits or by going into an existing building to enter a new market.” Either way, he adds, “it appears the economic downturn will produce stronger retail tenants and more strategic growth initiatives over the long term. Even through this economic shake-out, we still see a very strong investor appetite for the single tenant net lease space.”
To hear more of Hedrick’s thoughts on where the net lease market is headed, check out a recent blog we did on the subject.