Midwest Net Lease Report

The Midwest Market encompasses a varied set of states that mainly include: Missouri, Kansas, Minnesota, Illinois, Kentucky, Ohio, Indiana, Iowa and Wisconsin. The major cities and metro areas that highlight this market are St. Louis, Kansas City, Indianapolis, Minneapolis/St. Paul, Madison, Kansas City, Des Moines, Cincinnati and Columbus. Chicago continues to show its separation from the remainder of the Midwest Market with cap rates 100 bps lower than similar assets in other cities. St. Louis and Indianapolis have seen upticks in office and industrial absorption. Both major metropolises are experiencing lower unemployment and vacancy rates. This is good news, but the Midwest as a whole is still considered a very niche secondary market for the net lease investor.

There have been some new deliveries in St. Louis County, with over 1,000,000SF of outlet malls between two separate assets added in August and September of 2013. Developers are trying to create a destination shopping experience. It is too early in the aging to determine if this saturation of big box and big name retail in small concentrated areas will prove successful. The two new developments are within a mile of the largest outdoor mall that has over 1MM SF.