CHICAGO—The single tenantnet lease big box sector saw a significant shift in 2015, accordingto the latest report from the Boulder Group, a netlease firm based in suburban Chicago. Cap rates compressed from thefourth quarter of 2014 to the fourth quarter of 2015 by 63 bps to6.08%. That decline was steeper than seen in the entire net leaseretail sector, which compressed by only 25 bps during the sameperiod. This represents the first time since 2010 that the big boxsector was priced at a premium to the entire retail net leasemarket.

Boulder attributes much of the compression in the big box sectorto the introduction of Walmart Neighborhood Marketproperties to many markets throughout 2015. The number of thesestores available in the fourth quarter increased by about 200% whencompared to the prior year and now make up about 22% of the big boxsector. The median asking cap rate for these smaller Walmarts was5.10% leading to much of the cap rate compression within thissector.

However, although developers planto open another 100 of these Walmart Neighborhood Markets in fiscal2017, "the amount of private investors targeting net leaseassets over $10 million with cap rates below 5.50% islimited," RandyBlankstein, president of Boulder, tellsGlobeSt.com. "Historicallyinstitutions were major buyers in this price range but almost allhave yield thresholds above the current closing cap rates. Assupply increases with a limited buyer pool, the marketing time foreach property will increase."