Retail’s triple-net sector of commercial real estate has been hot for some time now, and if the recent ICSC N3 Triple Net Lease conference that some GRS Group team members attended is any indicator, that is not going to change very soon.
First of all, the conference was well attended. About 250 people showed up from around the country, which is pretty impressive considering that this is only its second year, and triple net is a very specialized property type. And attendees were a good mixed group, including representatives from large brokerage firms like CBRE, Marcus & Millichap and KW Commercial; small brokerage outfits; banks; lender-brokers; attorneys; and developers.
The belief shared by panelists at the conference is that the net-lease sector will continue to grow over the next 10 to 15 years. Part of the attraction is that net-lease tenants are familiar to the many non-professional investors involved in the asset class. People understand that they are investing in properties housed by Taco Bell, CVS, LA Fitness and other household names.
Sale-leaseback assets for tenants such as these are gaining in popularity as a result. It also doesn’t hurt that new prototype stores are gaining foot traffic due to the amenities that they increasingly provide, such as free wifi, space for customer meetings and improvements in site selection to better reach the customer.
However, one message from the conference is that some things don’t change when it comes to commercial real estate. Financing is still dependent on the type of loan (recourse or non-recourse), the tenant’s credit worthiness and the asset’s location.
So far, though, these national brands have figured out the best ways to to make sure these objectives are achieved, and it looks like triple-net retail will continue its momentum as an asset type well into the future.
What do you think?
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