Net Lease Sector Remains Healthy Despite Challenges Imposed by COVID-19
Colliers’ H1 2020 Single Tenant Net Lease Report examines COVID-19’s varying impact across retail sectors and regions. Without question, non-essential retailers like clothing stores, movie theatres and bars have borne the brunt of social distancing and lockdown measures while many essential retailers like grocery and home improvement stores experienced little to no decline in sales. Retailers were forced to adapt their business model over the past few months, and those that have already established or are planning to establish a seamless omnichannel approach will thrive moving forward.
As for the net lease sector, properties with investment grade rated tenants that are minimally impacted by COVID-19 will remain in favor. We expect to see continued competition among investors for high-quality net lease properties. With the stabilization of the 10-year treasury, at least for the next few years, investors should continue to garner higher leveraged returns. Net leases will remain an active vehicle for 1031 exchanges and we anticipate that cap rate expansion or contraction will continue to be largely driven by sector, location and quality of the tenant.
Download the H1 2020 Single Tenant Net Lease Report.