The Northmarq Single-Tenant Q1 2024 report revealed a significant increase in investment sales activity, reaching $11.2 billion, a 26% jump from the previous quarter. Despite a slight decline of 4.5% compared to the same period last year, analysts at Northmarq noted that the sector has maintained consistent performance and is on track to surpass total sales for 2023.
Investment sales volume by single-tenant asset type was as follows:
– Industrial – $4.03 billion
– Retail – $3.90 billion
– Office – $3.23 billion
Cap rates also saw an increase with an average of 20 basis points (bps) to reach 6.5%, marking the highest average since mid-year in2015 according to Northmarq’s report.The office sector had the highest cap rate at6 .81%, while retail remained lowest at6 .38%. Meanwhile, industrial reached6 .55%, which was102 bps higher than last year.
As buyers and sellers adjust their pricing expectations in today’s market, further increases across all sectors are expected throughout2024 , accordingto analysts atNorth mar q.
In terms of buyer types,the past decade has seen private buyers dominate between one-third and one-half of net lease property transactions.However,in Q1of2024 , public REITs became more active.”With36 % market share overall,public REITs dominated both office and retail sectors,”the report stated.Private buyers still remain relevant,but some individual investors may choose notto act due toelevated interest rates,and instead wait onthe sidelines for now,saysNorth mar qanalysts.This reboundin quarterly investment sales highlights continued strengthinthesingle tenant net lease market without explicitly mentioning “Connect” or “Connect CRE” or “Connect LA”.
