ATLANTA—With foreign capital flooding into net lease assets—and even bidding wars ensuing over prime assets in strong markets—could it be possible that the net lease market can weather storms better than other sectors? Is the net lease market recession proof?

GlobeSt.com caught up with Jereme Snyder, executive vice president of Retail Services at Colliers International, to get his take on the strength of the market, what to expect a year from now and remaining challenges in part three of this exclusive interview series. You can still read the first two parts: Colliers Sees Spill Over Into Tertiary Markets and Bidding Wars Escalating for These Assets.

GlobeSt.com: Will demand for net leased assets be this strong a year from now? Why or why not?

Snyder: Unless there is a major “Black Swan” event that affects the entire economy and greatly impairs liquidity, demand will be strong a year from now. The net leased market is incredibly attractive to a wide variety of capital sources because it offers passive income in exchange for low to no management, corporate guarantees and fixed increases over a long-duration.

We believe that, as the market evolves, more investment capital will enter into the real estate arena in the form of private net leased investments. In the event the market enters into another recession, and based on the last downturn we had, net lease deals were about the only assets that lenders were willing to finance. There are a lot of all cash Buyers for net lease assets which will also maintain the demand.      

GlobeSt.com: Where do the biggest opportunities in the net lease sector lie in the quarters ahead?   

Snyder: I think cap rates will remain low for the remainder of the year providing a stable environment for developers and investors to rely upon. We do not expect demand to decrease for well-located assets with strong real estate fundamentals. These deals will always have strong demand from the investor market.  

GlobeSt.com: What challenges do you see for the net lease sector in the quarters ahead?   

Snyder: As interest rates rise in the future ahead, this will create a larger gap between buyers' and sellers' expectations on values. This will create lulls in the market and could interrupt the transaction volume we have been seeing over the last few years. 

GlobeSt.com: How is the rising strength of the dollar impacting the net lease market, if at all?

Snyder: To date, we have not noticed a substantial impact to private net lease investments due to the rising strength of the dollar.