Apr
03

A Net Lease Bubble? Not for Awhile Yet

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With cap rates for core assets dipping down to levels last seen in 2007, it’s legitimate to question whether net lease is back to a bubble. CGA Capital Corp. principal Kyle Gore, moderating the “Capital Markets Update” panel at Wednesday’s RealShare Net Lease conference here, did just that.

If a bubble is forming, we’re not likely to see it burst anytime soon, in the view of Kenneth Zakin, senior managing director of NGKF Capital Markets. Even if interest rates rise, as many industry members believe they will sooner or later, the net lease market still has several good years ahead of it. “People still want to buy net lease,” said Zakin. “The capital isn’t going away.”

ARC Properties Trust’s James Steuterman, a panelist in a later discussion, similarly doesn’t see interest rate increases doing much to slow momentum. Although there have been some bumps in rates over the past six months, “the capital flow has been so strong that you haven’t really seen it in cap rates yet,” he noted.

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