According to a survey conducted by National Real Estate Investor (NREI), single-tenant net-lease properties, marked by “stable tenants with long-term leases,” continues to be an attractive investment for commercial real estate investors. More than 60 percent of survey respondents expect cap rates to increase in 2018, following a historic low of 6.07 percent in the fourth quarter of 2017. This, combined with the Fed’s plans to raise interest rates again this year, provides investors with a window of opportunity to put their dollars into retail real estate that may be below market value at a time when occupancy rates remain resilient and in-store sales continue to grow.
Moreover, with proper planning, investors have the potential to enhance their returns and long-term cash flow by raising rents and/or repurposing property to attract new tenants as the economy continues to improve.
This timing may also bode well for commercial real estate owners to sell their retail properties now, while interest rates remain low and investor demand remains high. This is especially true when the property is owned by a struggling retailer, restaurant or similar chain for which a sale with a lease-back could provide much-needed capital to improve their space and the customer experience.
Whether acquiring or disposing of commercial real estate, investors and property owners must conduct thorough due diligence under the guidance of experienced real estate professionals to maximize their intended results.
The team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email firstname.lastname@example.org.