Northmarq: Net Lease Retail — Investment Opportunities in the Face of Changing Market Conditions

Originally published by Shopping Center Business

Where are the opportunities in today’s single tenant net lease (STNL) market? The ever-changing nature of today’s retail environment has placed an emphasis on finding the best properties, while compressed cap rates and rising interest rates have created obstacles for investors looking for yield. 

Rent increases, tenant types, lease timelines and risk tolerance are all on the minds of established investors in the market as well as those looking to enter the arena for the first time. Regarding the new tenant entries to the net lease market, Curtis Hodges, regional managing director at Northmarq, sees emerging tenant concepts like medtail and daycare facilities as “likely to experience some consolidation and credit enhancement over time.” 

Of the current market, Maggie Holmes, senior vice president at Northmarq, says “If there are new investors wanting to enter the market, my advice to them is to be diligent and determine what your risk tolerance is. If you can’t take on a ton of risk, you want to focus more on credit and on well-located deals. If you can take on a little bit more risk, you’re looking for some investment-grade credit, shorter term deals or [secondary or tertiary markets].” 

Watch the video to learn more about net lease opportunities and trends.