The Resilience of Single-Tenant Net Lease Deals
In the midst of an unpredictable commercial real estate landscape, single tenant net lease deals (STNLs) have retained significant appeal for both seasoned and new investors. Leading this market segment are industrial properties, responsible for approximately 53% of all STNL transactions in the first half of 2023. The secret to their allure comes in several forms.Corporate guarantees offer investors unparalleled stability by eliminating the typical uncertainties associated with other tenants and lease types. Additionally, STNL industrial deals have attracted investors due to their potential for significant rent increases, providing a solid source of predictable income.
In addition to the industrial sector's strength, short-term sale-leaseback deals with corporate tenants are gaining traction, providing investors with flexibility and stability. The retail market is also finding its footing, with well-located retail properties backed by strong corporate tenants offering some certainty and stable income, while at significantly less yield than industrial. Regarding the future of traditional office spaces, STNL properties are prized for their sense of security, given a strong tenant choice, which makes them more attractive in today’s market.. Notably, there has been a shift in the buyer pool, with more investors increasingly recognizing the stability and potential of STNL industrial assets, solidifying their place as a beacon of reliability in an ever-changing real estate landscape.
Original Publication Credit: Globe St
Image Credit: Crexi