Is the Supply for Net Lease Properties Leveling Off?

The March 19, 2014 edition of National Real Estate Investor ( article. “Plateau Ahead for Net Lease?” by Beth Mattson Teig, projects a leveling off of the supply of net lease properties.

2013 was a record year to net lease sales for all property types.  The $44.8 billion of sales was 24% higher than in 2012.

While demand is high, the supply is projected to be an ongoing concern:

  1. Development has not kept pace with demand
  2. New Retail development is below traditional levels
  3. The lack of available supply is causing a run-up in pricing
  4. There  is a huge appetite for investment grade credit properties in major metro areas – especially with long leases
  5. The lack of supply is moving buyers to look at second tier product with lower credit ratings


Now may be the time for owners to consider their exit strategy from Net Lease properties.  As supply flattens, the best net lease opportunities will become even more valuable.  This trend is expected to increase the pricing of secondary assets. When supply catches up with demand, the reverse may be true.