2012 Forecast – Triple Net Leased, Single Tenant, National Credit Retail Getting Hotter

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I think 2012 will be a considerably better year for commercial real estate and an improved year for single family residential.

I’m working with out of state retail buyers looking for out of state, single tenant, triple net leased or preferably absolute net leased with a long corporate lease, so in this manner, business is getting back to normal.

If it’s after Thanksgiving, many sellers will wait until after the New Year to list.  That’s been the case this year, and I’ve seen better quality opportunities in the last two weeks become available than I’ve seen in that last six months.   However, there’s lots of competition with REITs, institutional investors such as pension funds and foreign investors competing for these.  If you see something that fits, by all means, go for it.  If you think the opportunity is a good, you’ll have plenty of company out there that feels the same way for the same reasons.

If you, as an individual investor, wait too long to make an offer, you’ll be up against REITs and institutional investors and you know whose offer will get accepted.  It takes the big investors several days to get moving so if you, an individual investor, can get moving faster, that give you a better chance of an accepted offer.  If you snooze you lose.

Lenders have their new allocations for this year so financing is almost like it was in 2005 and 2006.  We’re generally 200 basis point above 10 year treasuries so that can be in the low 4s for the right property.

The one caveat is that you’ll never find anything that’s absolutely perfect and you’ll never find anything totally without risk.  The free market is also the great equalizer in that it income is commensurate with risk.  The free market gives you the opportunity to lose your butt and also makes sure you don’t make too much money.   The only way to avoid this is to do nothing and then your return is guaranteed.

The one problem is that inventory is still very tight on the type of product just about everyone seems to want and that is single tenant, single parcel, long corporate backed triple net or absolute net lease, national credit of S&P BBB+ or better, retail.  Reverse 1031 exchange are a viable alternative with inventories this tight.

As always, I’m here to help, either on the acquisition or sell side.

Scott Harris at (310) 473-4789 or (614) 905-6614