SAN DIEGO—Many net-lease investors don't consider these investments a piece of real estate encumbered by a lease that grants someone to operate a business, Bill Rose, VP and national director of Marcus & Millichap's retail division, tells GlobeSt.com exclusively. Rose is concerned that investors often look at these investments as a bond, but that's not a good viewpoint.

“Sometimes, site selectors don't make a good call or things don't go as planned, and a retailer might have to close,” says Rose. “So, always look at the residual use of a property in the event your retailer doesn't succeed.”

Rose also recommends always looking at the balance sheet of any retailer whose space you're buying. “We learned during the credit freeze that even though somebody might have a nice credit rating, you still have to conduct your due diligence.”

All the fundamentals and market conditions support exceeding 2014's volume for net-lease transactions this year, Rose says. “But will there be enough investor sentiment to sell assets they current hold and for developers to release new product to the market? We've been tracking a significant amount of deliveries, and to the extent that developers will sell those assets, we absolutely should exceed 2014 production.”

Fast-food QSR properties will garner the most transactions this year, Rose predicts. “That segment continues to lead the industry in new deliveries and in investment product type. These are roughly $1-million to $2-million Carl's Jr., Wendy's and Burger King. They're almost ubiquitous in America. They're the simplest form of net-lease investment, and they make sense.”

As GlobeSt.com recently reported, many industry experts told GlobeSt.com exclusively that looking to secondary and tertiary markets and tenant quality are where the greatest opportunities lie in the net-lease sector. Look for an upcoming feature story in Real Estate Forum that delves into the subject of net lease on a more in-depth basis.