Greetings!
We hope you had a good and productive summer. The STNL space continues to be quite busy. Rising interest rates have slowed down investors a bit, but by and large, there is still a shortage of quality net lease properties in mid-size and larger MSA’s. Dollar stores are seeing slight upward pressure in cap rates and some have dramatically changed their lease structures from 15 year NNN terms to 10 year NN leases. The QSR sector continues to be the most active with more franchise operated vs. corporate operated transactions. Consumer products retailers such as Sherwin Williams, Tractor Supply and the medical related single tenant sector continue to show high investor interest.
What’s in store for the 4th quarter? We predict an uptick in sales volume across the STNL landscape as we approach the Christmas holiday season. For this reason, this issue, focuses on “bricks and mortar” retailers – with a peep back at past years and then looking at the present day. Also, we take a look at trends and the big players in the US e-commerce retail world.
As always, we welcome your comments and suggestions. Give us a call if we can be of service in your STNL needs as this is our specialty. Also, please welcome Rob Taylor to this publication as a member of our National Net Lease Team!
Warm regards,
Nancy & Rob
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IN THIS ISSUE:
- Market Update
- Industry Soundbites
- Ask Nancy
- Recent Sales
- Acquisition Opportunities
- Properties Wanted
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Nancy Miller, CCIM
President
Net Lease Investments
Bull Realty, Inc.
404-876-1640 x 118
NMiller@BullRealty.com
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Rob Taylor
Vice President
Net Lease Investment
Bull Realty, Inc.
404-829-4044
RTaylor@BullRealty.com
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Visit us at Booth 425. Email or call us to schedule a meeting.
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Top US Bricks and Mortar Retailers - Then and Now!
The NATIONAL SINGLE TENANT RETAILER was curious about the changes over the past several years in the “bricks and mortar” retailers. Specifically, with the help of data from the National Retail Federation, the chart below compares the ranking, revenues and number of store locations of the Top 10 US “bricks and mortar” retailers in 2009 and then in 2018. Most notably, Walmart and Kroger maintained their top positions. Costco moved up in the list and Sears and Best Buy dropped from the Top 10 retailers. Of course, Amazon with its acquisition of Whole Foods made it into the Top 10 in 2018 as well. Note the change in revenue (some significant) and number of locations across the board. It is clear that consumables – groceries and drugs – continue to be the drivers of revenue and growth.
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E-Commerce – Then and Now
According to the US Census Bureau, e-commerce as a percent of retail sales tracks for the same period:
2009: 3.9% of sales
2018: 9.4% of sales
Conclusion: Bricks and Mortar sales are still the way that most consumers shop.
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Top US E-Commerce Retailers in 2018
To round out the results, we identified the top E-Commerce retailers by market share for 2018. Not many surprises here.
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Fun Facts: The largest fast food chain in the US is Subway with the most locations. How many? 26,744!
Who's next? McDonalds with 11.3% (15,494 locations) and Burger King at 5.7% or 8,500.
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Who is Picking Your Fruit?
When I go to the grocery store, I have a ritual of feeling, smelling and viewing the cantaloupe, tomatoes, watermelon, pineapples, peaches, eggplant… you get the idea! It is important to select the perfect (or near perfect) item for later consumption. I have the need to “be one with the produce!”
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How about you?
Enter Stage Right –
Grocery home delivery. Both Amazon, through outlet Whole Foods, and Kroger have expanded their offering of home delivery of groceries in several cities. Amazon launched “Prime Now” grocery delivery in 28 cities and is expanding. Unlike the Kroger model, delivery is free with your Amazon Prime membership. Kroger is offering “Instacart” delivery to more than 1600 stores nationwide of its more than 2800 stores in the US for an annual fee. Wait! They started offering
driverless vehicle delivery in Phoenix last month!
Sure, there is probably a place for grocery home delivery. However, in a world that is driven by technology, efficiency and the internet, there are just some things that are better done the “old fashioned” way. Home delivery be damned! I am going to the grocery store
right now to buy produce and other items that I need, using my God given five senses to select them!
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Glenn in NJ:
“Nancy, we are only looking for a corporate guaranteed single tenant property. We are relying on the income for our retirement. Any advice on how to ensure that the tenant is strong?”
"Glenn, The good news is that a “credit” tenant guarantees the lease for the term. However, it is always a good idea to select fundamentally “good real estate.” We always recommend considering the following with any STNL investment: 1. quality of location (access, traffic counts, visibility), 2. competitive rent/square foot based on nearby credit tenant rents, and 3. area demographics are consistent with the tenant’s business concept. Most tenants have very sophisticated methods to assess the suitability of a site, so as a general rule, following these guidelines should serve you well.”
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- Sherwin Williams & Advance Auto Parts - Nancy Miller & Rob Taylor represented the seller in the sale of this two tenant retail building located in Powder Springs, GA. The June 2018 transaction sold for $3,515,000 at a 7.09% cap rate with a NN lease with options.
- Christian Brothers Automotive - Nancy Miller represented the buyer in the sale of Christian Brothers Automotive located in Grand Rapids, MI. The August 2018 transaction sold for $2,390,996 at a 6.75% cap rate with a 15 year NNN lease running through July 2032.
- Family Dollar - Nancy Miller represented the seller in the sale of Family Dollar located in Pensacola, FL. The July 2018 transaction sold for $1,912,445 at a 6% cap rate with a 15-year absolute NNN lease with 14+ years remaining on initial term.
- Taco Bell - Nancy Miller represented the seller in the sale of a Taco Bell located in Brownwood, TX to the existing tenant, a Taco Bell franchisee. The June 2018 transaction sold for $1,100,000.
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Acquisition Opportunities
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Cypress, TX
- $3,285,000 or a 5.5% cap
- Corporate guaranteed NNN lease
- 10+ years remaining
- Contact us for details
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Sherwin Williams
Villa Rica, GA
- New to Market!
- $1,500,000 or a 6.3% cap
- NN lease with options with 5 years remaining on initial term
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Cary, NC
- $2,291,800 or a 6.8% cap
- Corporate guaranteed NN lease
- 5+ years remaining
- Contact us for details
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Grand Prairie, TX
- Back Up Contract Available!
- $1,780,000 or 7.30% cap
- NN lease with options with 6 years remaining on initial term
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Louisville, KY
- Back Up Contract Available!
- $1,763,000 or a 6.8%
- Corporate guaranteed NN lease
- 7+ years remaining
- Contact us for details
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Net Lease Properties $1.5 - $4M in larger metros only
10+ years or more
NNN only
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Valuation Services
Would you like to see what your property would bring in today's market?
CLICK HERE
The market is in short supply of quality net lease properties. You will never get more for your property than today. Don’t wait. Let us give you a no-obligation Broker Opinion of Value.
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Listen to the Net Lease Experts on the CRE Show
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Nancy Miller, President of National Net Lease Investments with Bull Realty and Fred Weir, President at Meadow Brook Restaurant Co. joined Michael in Studio One to examine trends in single tenant net lease properties including market and cap rate trends.
Watch Now
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The information in this newsletter is deemed reliable but is not warranted. Any information important to your business should be independently confirmed in an appropriate due diligence period. All rights reserved.
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