The Small Space Marketplace

List Your Space

Find Space

Home About Us Executive Subscriber Membership RENTV Conferences Newsletter Contact Us Advertise
March 19, 2024
 Search RENTV
   Go!
 The REview
 News
News Home Page
Southern California
Northern California
Pacific Northwest
Texas/Southwest
Retail
Multifamily
Financing
Prop. Management
Archives
Press Releases
 R. E. Marketplace
Service Providers
JobWorks
Property Spotlight
 RENTV  Conferences
Subscriber Login:
  
Email      
    Go!
Password      
Forgot Password?



ORANGE COUNTY NEWS
Printer-friendly Version   Email an Associate
Net-Lease Investment Activity Close to Pre-Pandemic Levels

6/10/21

This report was provided by CBRE

Investment in U.S. net-lease properties was close to pre-pandemic levels in Q1 2021, driven by robust institutional acquisition activity, increased interest in office assets as return-to-the-workplace plans gained momentum and, despite COVID-19 related international travel restrictions, resilient foreign investment, according to the latest research from CBRE.

Net-lease properties are characterized by a lease structure in which the tenant agrees to pay a portion or all of the taxes, insurance fees and maintenance costs in addition to rent. While net-lease investment activity (comprising office, industrial and retail properties) decreased by 2.6% year-over-year in Q1 2021 to $14.3 bil, volume was up by 10% from pre-pandemic Q1 2019. The decline for total U.S. commercial real estate volume in Q1 2021 was deeper at 18.3% year-over-year.

Los Angeles and Orange County placed among the top 20 markets for total net-lease investments in the first quarter, with LA in spot No. 2 and the OC in 18th place. In Orange County, Q1 net-lease property investments increased 1.7% year over year to $223 mil.

Los Angeles placed No. 5 in office net-lease investment activity, more than doubling to $271 mil. LA also took first place in the industrial sector, despite a slight 1.3% decline in volume after a record 2020, while Orange County investment volume in the industrial sector nearly doubled to $191 mil.

Los Angeles was among the top five markets with the most net-lease international volume. Industrial and office assets accounted for 91% of all international net-lease investments in these markets.

“We continue to see strong demand for assets that are in superb strategic locations with one or two high-quality tenants to provide stability during uncertain times,” said Executive Vice President Anthony DeLorenzo. “In-place net leases diminish or even erase substantial economic risks while providing exceptional ease of ownership and long-term, stable cash flow.”

He added, “Recent transactions demonstrate substantial demand for these types of investments from 1031-exchange buyers. With potential tax changes underway, these investors are pushing even more money into the space right now.”

The office sector’s share of total net-lease investment volume increased by 5.2 percentage points from the year-earlier Q1 to 41.5%, with its largest first quarter volume on record at nearly $6 bil. The industrial sector continued to attract the most net-lease capital with its share remaining relatively unchanged at 43.4%, while the retail sector’s share fell by 5.4 percentage points to 15.1%.

Institutional and equity funds, the largest net-lease buyers this quarter, increased their acquisition activity by 40% year-over-year in Q1 2021 to $6.7 bil. Private investment in net-lease properties grew by 6.7% over the same period to $6.3 bil. REIT net-lease investment volume was down by 44% year-over-year in Q1 2021 to $1.4 bil.

While the COVID-19 downturn and travel restrictions have restricted international investors in acquiring U.S. net-lease assets, Q1 2021 foreign investment volume still increased by 8.7% year-over-year to $1.7 bil. International buyers accounted for 11.6% of total net-lease volume in Q1 2021, above the five-year Q1 average of 11.1%. San Francisco, Richmond, Boston, Los Angeles and New York City had the most net-lease international investment in Q1 2021. Singapore, South Korea, Canada and Kuwait comprised 75% of all offshore capital targeting U.S. net-lease properties for the year ending Q1 2021.

The net-lease sector is attractive to investors because the long-term leases and creditworthy tenants are considered safe attributes during an economic downturn. During the COVID-19 pandemic, the net-lease share of total commercial real estate volume increased to 14.7% in 2020 from 13.5% for full year 2019. The sector exhibited a similar trend during the GFC when its share increased to 15.1% for full year 2009 from 8.7% for full year 2007. For the year ending in Q1 2021, while total net-lease investment volume declined by 25.9% compared with the same period last year as the COVID-19 economic downturn stalled transaction activity, it comprised 15.4% of total commercial real estate investment volume.





Return to the Archive page


 


 
 


 
 



Home | About Us | Newsletter | Contact Us | Executive Subscriber Membership | Executive Subscriber Home | Advertise
Southern California | Northern California | Pacific Northwest | Southwest | Retail | Multifamily | Financing | Property Management
Archives | Press Releases | Service Providers | JobWorks | Property Listings

Copyright © 2024 by RENTV, All Rights Reserved
Website designed by Regency Web Services, Inc. and powered by Lightning Media