2021 Net Lease Overall Sales Volume and Cap Rates

Source: Stan Johnson Co. Research, Real Capital Analytics

More often than not, the final quarter of the year is the strongest. When investors make a push to place dollars before year-end, the resulting level of activity can be significant, and 2021 did not disappoint. Not only did the single-tenant net lease market report its strongest quarter of investment sales activity in history during the final three months of the year, but it outpaced the previous high-water mark by more than 46 percent. An astounding $36.3 billion in sales were reported during fourth quarter 2021, driving annual totals north of $96.5 billion and setting a new annual sales record for the single-tenant sector.

Along with other factors, the lack of available supply has impacted cap rates across the industry. In the net lease space, we’ve seen additional cap rate compression in the industrial and retail sectors quarter-to-quarter as well as year-over-year. In fact, industrial cap rates have compressed so significantly, it’s difficult to imagine they could go much lower than the current average of 5.59 percent. Only the net lease office sector reported higher year-over-year cap rates, ending 2021 at 6.3 percent, although a four-basis-point increase is hardly noteworthy.

Lanie Beck joined Stan Johnson Co. in 2013. She oversees the firm’s corporate research efforts, publishing the quarterly MarketSnapshot report, the Viewpoint series of whitepapers and a variety of other thought leadership content. Beck is also responsible for leading Stan Johnson Co.’s corporate marketing, communications and public relations strategy, including the coordination of the firm’s social media presence, industry conference and event sponsorships, as well as management of the brand.

—Posted on Mar. 25, 2022

Source: Stan Johnson Co. Research, Real Capital Analytics

Following the close of the third quarter, the single-tenant net lease market is reporting strong year-over-year growth. The overall net lease market reported in excess of $20 billion of activity in the last three months, making it the sixth strongest quarter on record. Despite the positive momentum, the market continues to see some lasting effects from the pandemic. Here are a few of the top trends we see impacting the market for the remainder of 2021 and into 2022:

Low Interest Rates & Strong Buyer Demand

Rates are low and capital is available, and this has been an attractive combination for investors. Without an increase in rates or a tightening from lenders, this environment will continue to fuel buyer demand.

Lack of Inventory

Unfortunately for buyers, there continues to be a lack of available inventory across all product types. For example, industrial investors are having an increasingly difficult time finding yield.

Supply Chain Issues & Labor Shortages

As we approach the holiday shopping season, expected delivery delays combined with supply shortages may present challenges. Additionally, in what some are calling “The Great Resignation,” a high number of employees are leaving the workforce or switching jobs, and employers across all industries are now facing labor shortages.

Inflation

Inflation remains a concern for investors and consumers, with CPI rising 5.4 percent during the 12 months ending in September 2021. Costs are expected to rise for a number of goods and services, further complicating the impact.

Lanie Beck joined Stan Johnson Co. in 2013. She oversees the firm’s corporate research efforts, publishing the quarterly MarketSnapshot report, the Viewpoint series of whitepapers and a variety of other thought leadership content. Beck is also responsible for leading Stan Johnson Co.’s corporate marketing, communications and public relations strategy, including the coordination of the firm’s social media presence, industry conference and event sponsorships, as well as management of the brand.

—Posted on Dec. 21, 2021