{"id":1004133668,"date":"2015-12-16T10:57:27","date_gmt":"2015-12-16T18:57:27","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004133668"},"modified":"2022-12-08T22:35:57","modified_gmt":"2022-12-09T06:35:57","slug":"net-lease-column-whats-new-in-net-lease-for-2016","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/net-lease-column-whats-new-in-net-lease-for-2016\/","title":{"rendered":"Net Lease Column: What&#8217;s New in Net Lease for 2016?"},"content":{"rendered":"<p>By Stephen Counts, Associate Director,\u00a0<a href=\"https:\/\/www.calkain.com\/\" target=\"_blank\" rel=\"noopener\">Calkain Cos.<\/a><\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004133669\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/net-lease-column-whats-new-in-net-lease-for-2016\/stephen-counts-calkain\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg\" data-orig-size=\"764,995\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"Stephen Counts, Calkain\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg?w=764\" class=\"alignright size-medium wp-image-1004133669\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg\" alt=\"Stephen Counts, Calkain\" width=\"230\" height=\"300\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg 764w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Stephen-Counts-Calkain.jpg?resize=230,300 230w\" sizes=\"auto, (max-width: 230px) 100vw, 230px\" \/><\/a>On a recent trip to\u00a0Chicago, I had the opportunity to chat\u00a0with some of the top net lease minds in the country about\u00a0current trends in the sector and what we expect to see in 2016. It has been another great year for the net lease industry, and we have seen the largest sale-leaseback transaction volume in recent history in 2015. Despite some concerns going into\u00a02016, net lease assets should remain sought after by private and institutional buyers due to their passive income structures and stability.<\/p>\n<p>The Federal Reserve announced that it\u00a0expects to raise rates this week for the first time in seven years, and the impact that will have on cap rates and financing is one of the most significant concerns right now in the net lease industry. While\u00a0demand for quality assets (well-located, long-term credit assets with increases) are showing no signs of softening, we have already started seeing some tenants&#8217; inventory sitting longer and small indications of the market softening, most of it\u00a0among\u00a0properties located in rural markets or those\u00a0with no rental rate escalations in the initial term.<\/p>\n<p>Additional trends we expect to see in 2016 include:<\/p>\n<ul>\n<li><strong>An average increase in cap rates of between 25 and 75 basis points.<\/strong>\u00a0Individual sellers will try to\u00a0hold firm at historically high prices, but preferred developers will have to adjust to the market in order to\u00a0sell and move on to the next deal.<\/li>\n<li><strong>Cap rates will not rise drastically.<\/strong> This is because the yields will become accretive to institutional investors as they correct slightly. In the past few years, institutional buyers have been creative in finding\u00a0accretive yields by completing forward take-outs and participating in JV deals with developers. As property values stabilize, institutional buyers will be able to buy more traditional investment properties.<\/li>\n<li><strong>A continued\u00a0increase in demand for net lease development land.<\/strong> As a result of higher land prices, we will see net lease developers and tenants become more creative with their development strategies. This will increase the supply of retail, condos and multi-tenant net-leased properties in well-located areas. These well-located properties will remain in high demand from investors and will not see as much upward pressure on cap rates.<\/li>\n<li><strong>Investors becoming more comfortable with franchisee credit and short-term properties in primary and secondary markets. <\/strong>As economy fundamentals improve, investors view tenants with below-market rents or strong sales numbers as a safe investment and easily re-tenantable if the occupant\u00a0were to leave.<\/li>\n<\/ul>\n<p>Despite some nominal changes, 2016 should be another good year for the net lease industry overall. Any shift in cap rates as a result of interest rates will occur slowly; initially, there might be a gap between seller and buyer expectations, but the market will correct accordingly to more normalized levels. As cap rates correct, institutional capital on the sidelines will rejoin the market, thus maintaining\u00a0the aggressive demand for net-leased properties.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Stephen Counts, Associate Director, Calkain Cos.: The net lease industry has seen the largest sale-leaseback transaction volume in recent history. Can we expect the same in 2016?<\/p>\n","protected":false},"author":1242,"featured_media":1004133786,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,23891,21742,21749,21684],"tags":[],"class_list":["post-1004133668","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-national","category-latest","category-retail","category-viewpoint"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Net Lease Column: What&#039;s New in Net Lease for 2016? - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/net-lease-column-whats-new-in-net-lease-for-2016\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Net Lease Column: What&#039;s New in Net Lease for 2016?\" \/>\n<meta property=\"og:description\" content=\"By Stephen Counts, Associate Director, Calkain Cos.: The net lease industry has seen the largest sale-leaseback transaction volume in recent history. 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