(Newswire.net -- April 05, 2013) Minneapolis, MN -- J.G.M. Properties, Inc. presents their on the performance of the retail for lease market in the first quarter of 2013. Statistics indicate that retail for lease cap rates remained at 2012 fourth quarter levels while cap rates for net lease office and industrial properties have declined. In the first quarter of 2013, cap rates for the single tenant net leased market remained near historic lows for office, industrial, and retail sectors. During this period, the greatest compression was experienced by properties occupied by credit tenants with long term leases; this can be attributed to an increasing number of property owners with short term leases trying to capitalize on the high investor demand for single tenant properties with long term leases.
Net retail for lease properties remain priced at a 45 and 77 basis point premium over office and industrial properties respectively regardless of the decline in cap rates for industrial and office properties. From the last quarter of 2012 to the first quarter of 2013, overall property supply across the entire net retail for lease sector decreased by more than 17%. The majority of active net lease participants (around 37%) are expecting 2013 cap rates to remain unchanged or decline by less than 24 basis points by the end of 2013. Due to the stability and financing availability of this asset class, the national single tenant net lease market should remain active throughout 2013.
A representative of this Minnesota commercial real estate company cites a recent article written by Randy Blankstein, President of The Boulder Group stating, “newly constructed assets will command the lowest retail for lease cap rates and have the highest demand due to a limited development pipeline and shrinking supply. Given the attractive refinance rates available, many current owners will hold; properties with long term leases will be more difficult to find as the majority of net lease participants expect cap rates to decline further in 2013.”
The supply of office and industrial properties reached their lowest point in the past 3 years while the supply of net retail for lease properties reached their lowest point in the past 2 years. A major theme throughout the net lease industry is the continuing scarce supply of properties, specifically new construction in the first quarter of 2013. However, despite this the median asking versus closed cap rate spread for office and retail for lease properties rose.
J.G.M. Properties, Inc. a Minneapolis commercial real estate and property management company headquartered in Bloomington, MN, and is releasing this summary report outlining insight provided by industry experts as it pertains to not just Minnesota retail space and over all commercial real estate for 2013, but also references the overall trends that are being recognized industry wide. JGM’s primary business is marketing Minneapolis office space and suburban St Paul commercial real estate.
Cited source: Randy Blankstein, President of The Boulder Group (2013). Net Lease Market Remains White Hot [Blog/Commentary]. Retrieved from: