Harris, who recently brokered the $68.4 million sale of a 27-property portfolio of single-tenant retail buildings across 18 states, says the single tenant net lease retail market has rebounded quickly from the height of the pandemic in 2020.  "Investor confidence is returning to the segment, not just essential retail," he says. "Average cap rates for single tenant net lease retail product have been holding steady and possibly even decreasing for the most desirable assets in terms of tenant credit, location and lease fundamentals."

Essential retailers, such as groceries, dollar stores, auto stores, pharmacies and convenience stores, are still in demand. "We are also seeing high demand for sporting goods retailers like Academy Sports who have done remarkably well during the pandemic," Harris says.

While the initial COVID shutdowns caused a significant decrease in investor interest in non-essential retail properties and a smaller decrease in tertiary or shorter-term deals, the situation is improving. "The so-called 'flight to quality' had certainly taken over the market for a while, with most investors in the retail space seeking the most secure assets possible," Harris says. "As we have weathered the pandemic and are seeing the benefits of the COVID vaccines in the US, there is definitely a return to normal going on as it relates to the single-tenant net lease retail investor marketplace."

With widespread vaccinations occurring, the market should continue to improve in the sector this year. "As things continue to open up as the year progresses, we are expecting to see increased transaction volumes in the single-tenant net lease retail sector with a continued increasing appetite again for non-essential retail and experiential retail," Harris says.