Record Annual Net-Lease Sales Boosted by Secondary & Tertiary Markets

 

 

  • Full-year 2019 net-lease investment volume increased by 10.9% to a record $77.5 billion, as investors sought attractive yield at lower risk than other commercial real estate assets and despite a 23% year-over-year drop in Q4 volume to $19.5 billion.

 

  • Seattle was the most favored investment market in Q4, while Los Angeles, New York City and San Jose had the most full-year volume.  Additionally, investors were increasingly attracted to net-lease investment opportunities in high-growth secondary and tertiary markets, with some of the largest annual percentage gains in San Diego, the Inland Empire, Tampa, Indianapolis and Memphis.

 

  • Net-lease cap rates were stable in Q4 and are expected to remain so in 2020. The spread over the 10-year Treasury rate tightened to 434 bps in Q4 after four previous quarters of rising spreads.

 

  • The global search for yield and portfolio diversification continued to attract international investors to the U.S. net-lease market. Cross-border capital for net-lease properties reached $9 billion in 2019, a 0.7% increase from 2018. Over the past two years, the top countries for inbound capital were Canada, Germany, Spain and Switzerland.