According to a recent report by Northmarq, the net lease retail market has seen significant growth in recent years, with the inventory expanding from $9 billion in 2022 to over $24 billion today. However, one category that has stood out and exceeded expectations is quick-service restaurants (QSRs). In fact, they have become highly sought-after assets for private investors seeking stable cash flow amidst an uncertain financial climate.
The report’s authors Bryn Feller, Isaiah Harf and Christian Tremblay note that QSR cap rates have remained relatively stable at 5-6%, while other retail segments have experienced higher cap rates. This indicates a strong investor appetite for these properties.
The success of QSR properties can be attributed to several key factors outlined in the Northmarq report. These include their low price points which make them attractive to private investors with available cash. Additionally, there is reduced dependence on 1031 exchange investors and long lease terms which provide ease of ownership for owners.
Another advantage highlighted in the report is the lack of online competition faced by QSRs compared to other retail categories. With no option for customers to order fresh hot food through Amazon or other online platforms, this provides comfort and security for investors.
In conclusion,QSRs continue to outperform many other net lease retail categories due its unique advantages such as low price points,ease of ownership,and lack of online competition.This makes it an attractive investment option particularly during times when financial markets are uncertain.
