Restaurants continue to be a highly desired asset among net lease investors.
By Jonathan Hipp|September 11, 2014 at 12:11 PM
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Restaurants continue to be a highly desired asset among net lease investors. With QSR & Casual Dining restaurants leading the way, cap rates continue to decline – average QSR cap rates dropped from 6.61% in 2013 to 6.38% in 2014 and Casual Dining from 7.29% to 7.03%. Driven by a stronger economy and historically high levels of pentup demand among consumers, restaurant-industry sales are expected to hit a record high in 2014. According to the National Restaurant Association’s Restaurant Industry Forecast report, restaurant-and-foodservice sales are projected to total $683.4 billion in 2014, up 3.6 percent from 2013. Restaurant consumer spending has already increased 1.7% in the first quarter of 2014 according to the NPD Group despite first quarter foot traffic declining by 1%. This increase in spending is attributed to the industry wide average check increasing to $6.62 per person.
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The property, originally built for Continental Can Company, is currently 70% leased to more than 20 tenants. No financial terms of the transaction were disclosed. Senior mortgage financing was provided by AmeriServ Financial.
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