ORLANDO—Net lease assets are some of the most predictable and typically, long term commercial real estate assets available in today's market. So says David Sobelman, executive vice president and managing partner at Calkain.

“Those attributes, among dozens of related variables, are the reason why most investors are attracted to the investment category,” he tells GlobeSt.com. “However, some of the world's greatest pontificators have always known that change is inevitable.”

Calkain pointed to a quip from Henry David Thoreau, who explained in the mid-1800s that "Things do not change, we change." As he sees it, the same theory can be applied to single-tenant real estate and especially how tenants operate their companies from their physical locations. 

“There are reasons tenants don't sign indefinitely termed leases with an endless amount of time in which they are responsible for that building or space,” Sobelman says. “Their business will change, people will change and, in essence, real estate will change. “

Fast forward 35 years, he continues, and projecting the state of the entire net lease investment market will be synonymous with scientists saying that with the advancement in medicine; people will be able to live forever.  But he adds, with the benefit of hindsight we can all agree that change has occurred with net leased assets. With that, he offers 10 projections that future generations will face within the industry. We'll share four of them here and six more in an upcoming Orlando edition.

1. Office, industrial and retail will have morphed.

“We're already seeing how tenants are following their sales and customer bases, and are changing their operational structures to adhere to the demands of their employees, their customers and their delivery of their services,” Sobelman says. “Whether that means more streamlined distribution for industrial properties, less square footage for office space or more efficient retail sales channels, net lease properties will be different in the future than they are today.”

2. Cap rates will remain constant but prices will increase drastically.

“Throughout the last 20 years or so, cap rates haven't changed much for net lease assets when compared to other commercial real estate investments,” Sobelman says. “There is roughly a 250 basis point window where net lease assets typically trade on the open market. Keep in mind, rents will be higher and therefore, values will increase accordingly.”

3. Investors and owners will be more institutional.

“It is no secret that the vast majority of transactions are completed by private individuals or small partnerships investing their own money into any one net lease asset,” Sobelman says. “While large transactions get the most attention, more private-market assets will be acquired over time by more organized and larger firms who have set a new standard for sophisticated investing in the net lease space.”

4. Transactions will incorporate fewer people.

“We're already seeing a decrease in the amount of people ultimately needed for a transaction,” Sobelman says. “There was once a day where there could be as many as 20-plus people involved in any one net lease transaction. That metric has been reduced by half in today's market and, most likely, will continue to decline as practitioners become more efficient with their practices and consolidation of like-services and firms continues over the next three decades.”