Magazine article Mortgage Banking

Single-Tenant Net Lease Sector Thriving

Magazine article Mortgage Banking

Single-Tenant Net Lease Sector Thriving

Article excerpt

Strong investor interest pushed the single-tenant net lease sector into uncharted territory last year, with more than $30 billion of transactions-150 percent more than in 2009. And some say transaction volume could reach $40 billion this year as prices increase.

"There is just not enough quality net lease product to satisfy investor demand at the moment," said Guy Ponticiello, managing director and leader of Chicago-based Jones Lang LaSalle's Corporate Finance and Net Lease group. "Investors searching for core product are having a tough time placing their capital in the first half of 2013."

Winston Orzechowski, research director with Calkain Companies, Reston, Virginia, agreed. "The running theme in this sector is the lack of supply and high demand," he said. "It's like a mantra."

"These are very attractive assets for investors," Orzechowski said. "So you have people more willing to invest and at the same time a lack of supply." He said construction dropped off with the recession, "so there's been a lack of product on the market and a lack of new product entering the market."

This low supply coupled with strong demand has led to remarkably low cap rates in the single-tenant net lease sector. …

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