It’s No Longer a Sellers' Market for Net Lease

Randy Blankstein

In the fourth quarter of 2018 the net lease market shifted away from favoring sellers and moved into a more neutral stance. That quarter, the spread between asking and closed cap rates was 31 basis points, the largest since the second quarter of 2017, according to a new report by The Boulder Group. Furthermore, it reported that the same spread for short term leased properties with non-investment grade tenants was even greater at 51 basis points for the quarter.

There is a growing sense that the best of the sellers’ market is over, Randy Blankstein, president and founder of The Boulder Group tells GlobeSt.com. This is not to say that great bargains can be had by buyers, he continues. “It’s not a sellers’ market anymore but not a buyers’ market either. I would put it as the best pricing days are more more likely behind than in front of us.”

More Supply, Buyers Who Accept Risk

Still, there are bargains to be had for buyers willing to assume a certain level of risk. Namely, investors willing to take on the risk of shorter term leases or properties without investment grade tenants or strong residual real estate.