Monday, August 10, 2009

Net Lease Solstice

By David Sobelman

When describing the point at which the Sun's apparent position in the sky to reach its northernmost or southernmost extreme, one can only wonder if that is what is happening in the net lease investment community; has there been an extreme change in the industry. We have all seen transaction volume decline, but is that the only variable driving the market? What about capitalization (CAP) rates, lease terms and values of underlying real estate. Has an extreme determination been concluded on the net lease investment market? Are we reaching the "solstice" and will we now see stabilization over time? One thing is for sure, investment parameters have changed, but an extreme polarization of the net lease market has not. CAP rates remain somewhat stable as compared to more volatile investment segments, i.e., vacant properties, land, multi-family, etc. So reaching the net lease solstice has not occurred and may not as the nature of the investment segment does not allow itself the volatility of extreme market changes.

No comments:

Post a Comment