Overall retail cap rates ticked up a bit in September but remainsub-seven at 6.94%. Banks continue to sport the lowest cap rateaverage at 5.40%. QSR cap rates are the second lowest at 6.05%.Dollar Stores also saw a reduction in cap rates, going from 7.61%in August to 7.15% in September. Much of this change is beingdriven by the high demand for Dollar General properties, whichoften feature fully triple net leases for 10+ years.
Going forward we expect deal flow to pick up in the 4th quarteras investors try to close out deals by year end, and there is alarge inventory of single tenant deliveries planned for 4Q14 and1Q15. Also, we will be looking very closely at rising interestrates to see if continued strong investor demand will be enough tooffset the increased price of borrowing.
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