Are Single Tenant Cap Rates Rising?

Not in the Pacific Northwest

Recently we’ve been reading more and more articles talking about increasing cap rates in the retail investment market, specifically the single-tenant segment.

Our initial reaction was that the Pacific Northwest market might not be experiencing the same cap rate decompression that was taking place nation-wide, however it was worth taking a closer look.  Our research team analyzed nearly 500 single-tenant sales from 2014-2017YTD. We broke the single-tenant market into 8 separate categories which include Fast Food/Coffee Shops, Drug Stores and Causal Restaurants among others.  Our initial reaction proved correct for 6 (almost 7) of the 8 categories.  That means we are actually witnessing the 7th consecutive year of cap rate compression for the vast majority of single-tenant retail assets.  The Pacific Northwest remains one of the healthiest single-tenant investment markets in the nation.

Link to Single Tenant Cap Rate Graphs