Single Tenant Net Leased Demand Increases


The marketplace is currently seeing increased investor demand for single-tenant, net-leased properties with shorter terms remaining on their leases. The trend over the past few years has been remarkable, for leases with less than 10 years, and sometimes less than five years remaining.

Stan Johnson Co. dispositions of single-tenant, net-leased buildings with less than 10 years on the lease increased by 25% in 2009-10; and a remarkable 97.14% increase in 2010-11. In 2011-12, demand rose another 84%, and the 2013 increase is on track to continue the trend. Stan Johnson Company properties with less than five years remaining on the lease had increases that were even more spectacular: 2009-10, 16.67%; 2010-11, 114.29%; and 2011-12, 120%.

These huge jumps are due, in part, to a lack of new properties becoming available since the economic downturn in 2008. These conditions have driven cap rates down, obliging investors to take greater risk.


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