In this market, as cap rates expand for net lease properties,relationships will matter.

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"I think this is becoming a very relationship-driven marketplacein the capital markets right now," says James Koman, CEO of ElmTreeFunds. "If you don't have those deep relationships where you have astrong balance sheet, or you're sitting on a lot of dry gunpowderright now, it's going to be a much tougher process to work withinthe lending community."

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For the next two to three months, Koman doesn't see a lot ofdeals being completed on net lease properties.

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"I think the underwriting practices will eventually get to morenormal levels, but I think the lenders are going to continue to bestill picky through the whole process," Koman says. "It's going totake a while to make sure that balance sheets and the operation ofthese businesses are going to be able to perform."

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Koman believes that there will be a flight to quality in the netlease market for a while. "The mission-critical assets withlong-term leases and investment-grade tenants are going to behighly sought after if we have these sustained recessionaryperiods," he says.

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In areas like hotels, malls and retail, Koman sees opportunitiesfor distressed buys. "Those assets are going to be out there, andit's going to be tough to find owners, buyers and operators of thattype of product," he says.

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But buyers could be lining up for other types of assets.

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"These e-commerce facilities, logistic distribution facilitiesand cold storage facilities are driving this marketplace as we moveforward," Koman says. "I think that this current environment isgoing to accelerate this trend due to the current lack of abilityto shop at brick and mortar stores."

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Without the pandemic, Koman says this transition to e-commercemight have taken five years. "I think that five-year transition iswhat we're going to see over the next six to 12 months," Komansays. "You're going to see a lot more retail closing down. I thinkyou're going to see a lot more of the retail consumers getting verycomfortable with online shopping."

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Among the retailers disappearing could be shoe stores andclothing stores now that consumers have grown comfortable with thereturn process for items bought online. Technology will hasten thattransition. "Artificial intelligence is probably 12 to 24 monthsaway from allowing you to walk in front of a mirror and try onclothes," Koman says.

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Already, people can walk in front of the mirror and do a workoutwith Mirror home gym. "You're going to walk to that mirror," hesays. "There is going to be a camera behind you. It's going toidentify your whole body, and it's effectively going to be able totransmit that out to all of these different retailers. You're justgoing to match up the outfits that you want, or it's going to showyou that outfit like you're in the store trying it on. Then you'rejust going to place that order."

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Leslie Shaver

Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.