As spring unfolds, key areas of the net lease market such asretail, sale leasebacks and urban investments seem set to grow.Numbers and analysis from the first quarter of 2010 point to betterdays and more opportunities ahead.
Retail
As of March 2010 consumer spending has increased over the past five months and retail sales have risenthe past four. Retail sales in the first quarter 2010 are up 1.9%over the previous quarter and up 5% compared to the same periodlast year. Retail transaction volume totaled $3.1 billion for the1Q 2010, which is a steady improvement from $2.2 billion in thesame period last year. Furthermore, according to a major commercial real estate magazine “investorsare showing strong interest in well-stabilized retail propertiesthat generate consistent cash flows”. This description fitsperfectly with net lease investments, which are defined by theirstability.
Sale Leasebacks
It has been estimated that there is at least $1 billion incorporate owned essential real estate and according to RW Baird “strong corporate demand forsale-leaseback transactions”. If only a fraction of this $1trillion were to enter the market, it would be a huge boon for netleases. Sale-leasebacks, which are almost always structured as netleases, offer corporations a chance to pull vital equity out oftheir real estate and enhance current operations. The real estateis sold and a long term lease is signed which leases back theproperty. Sale leasebacks have already provided the basis for manynet lease transactions in the last two years and that trend looksto continue to pick up steam.
Urban Investments
There has been a lot of talk about the upward trend in urbaninvestments. Walgreens purchased Duane Reade and their 258 New Yorkmetro area locations for $1 billion and those leases have beenrecently valued at $74 million. The German group, GLL Real EstatePartners also entered the urban market by purchasing 14,000 sq. ft. of New York retail condominiums fromHines. The urban market is one the most attractive today because itensures a properties close proximity to large populations. As aresult, net lease urban properties have increasingly been indemand.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
