TULSA, OK—“Many investors are leaving or further diversifyingtheir stock and bond portfolios, and putting their money to work insingle-tenant, net lease investments.” So says Stan Johnson's BradPepin, senior director in the Tulsa, OK office. GlobeSt.comrecently caught up with Pepin to chat about net lease developmentand the state of the financial markets impacting investor interestin net lease retail properties in preparation forthe upcoming ICSC ReCon event in Las Vegas.

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GlobeSt.com: How would you describe developmentactivity in net lease retail properties? How has it changedover the past few years?

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Brad Pepin: Net lease retaildevelopment continues to be strong throughout the country,especially in high-growth areas. In addition, retailers suchas Dollar General and Family Dollar have expanded their footprintexponentially as compared to pre-recession norms. Net leaseinvestors, both institutional and individual, continue to seekproduct at an aggressive level and causing there to be more demandthan supply. This, combined with low interest rates, has keptcap rates at historical lows.

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GlobeSt.com: How is the current state of thefinancial markets impacting investor interest in net lease retailproperties?

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Pepin: Many investors are leaving orfurther diversifying their stock and bond portfolios, and puttingtheir money to work in single-tenant, net leaseinvestments. The financial markets continue to be volatile,causing passive investors to seek stability and consistency oftheir returns and earnings through commercial real estate. Inaddition, the “bricks and mortar” characteristics of commercialreal estate adds to the security and comfort for investors whodesire to sleep better at night. The NNN lease components ofcommercial real estate provide that passivity and consistency ofreturn on investment.

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GlobeSt.com: What obstacles are developersencountering with net lease retailproperties?

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Pepin: Retailer tenants are very keenon where cap rates are trading today for their particularbuild-to-suit project. Request-for-Proposals are becoming morecompetitive and rent constants continue to have downwardpressure. In addition to this, some of our active developerclients are finding it difficult to provide the equity needed forevery development they have in their pipeline. We haveassisted our developer clients with various equity sources andcreated joint-venture partnerships to fill that capitalvoid. It becomes a win-win for everyone involved, and allowsthe developers to take on more build-to-suit projects.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.