Market shifts and changes can have a drastic impact on your triple net property investments. From what types of buildings and businesses will be most stable and lucrative, to when and where to buy an NNN building for your portfolio, you should keep a keen eye on the market trends that are unfolding.
There are some big things underway in the realm of single tenant net leases, but trends can often be difficult to navigate as you try to determine which will be fleeting and which could have longer-lasting impacts on your NNN investments.
These are the top 4 things we want you to know about the significant shifts taking place in the single tenant net lease market.
1. Cap Rates on NNN Properties Are Climbing (And More Properties Are Being Listed)
Cap rates on net lease properties hit a new historic high midway through 2018, reaching rates that we haven’t seen since 2011. Cap rates are anticipated to continue rising, making net lease real estate an even stronger investment with low risk and high reward potential.
In addition to climbing cap rates, there are also more NNN properties being listed. As an investor, this means you have the opportunity to be selective and choose from an array of different options on the market (and potentially get a lower price on your triple net property due to increased listings on the market). Though fluctuations can always occur, the single tenant net lease market is predicted to remain stable as a source of low-risk, reliable-return investments.
2. Single Tenant Net Lease Properties Are Trending over Multi-Tenant
Single tenant net lease properties are currently more popular investments than multi-tenant properties as the age of thriving shopping centers and malls experiences a decline. Large brands are more frequently opting to move out of mall settings to establish a destination for their products. In addition to the trend leaning toward single tenant in net leases, investing in this type of property will simplify your duties as a landlord. You’ll have just one tenant, typically in a long-term lease, who will manage operating expenses, maintenance, and taxes for the building (rather than you having to divvy up costs amongst multiple tenants according to different agreements).
3. Ecommerce Is Driving Investment Shifts
Ecommerce has caused changed how consumers purchase goods, and due to the convenience of shopping online, many people simply aren’t as motivated to shop brick and mortar retail locations as they once were. While this change has certainly impacted retail brands significantly, it has also caused a ripple in triple net real estate investments. More and more often, investors are favoring NNN properties that are bit more immune to the impact of ecommerce, such as:
- Grocery Stores
- Gyms and Fitness Centers
- Medical Clinics and Facilities
- Gas Stations and Convenience Store
- Dollar Stores
- Drug Stores
4. Federal Tax Law Changes May Bring Positive Impact (Especially in the Single Tenant Net Lease Market)
The new federal tax laws that were passed at the end of 2017 will certainly impact the net lease market. Since the laws are relatively new, it will take time to understand exactly how the tax cuts will impact the market overall in terms of savings, it’s predicted that the change will fuel growth in the investment market, particularly when it comes to single tenant net lease properties.
Sands Investment Group is an esteemed team of experts in the net lease industry, and we have the experience and expertise to help you navigate current and upcoming single tenant net lease market trends (in fact, we’re the fastest growing net lease investment company in America, with over 1,700 transactions in 48 states (to the tune of $4 Billion) since 2010.)
Want to learn more about NNN properties for sale and speak with an industry expert about what the single tenant net lease market has in store for investors? Get in touch with an expert today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.