Net Lease Dollar Store Cap Rates Reach Three Year Low

WILMETTE, Ill., July 30, 2020 /PRNewswire-PRWeb/ --A The Boulder Group announced the release of its Net Lease Dollar Store Report today. In the second quarter national asking cap rates in the single tenant dollar store sector decreased to 6.98%, according to the 2020 Net Lease Dollar Store Report. This represented a 12 basis point decrease when compared to the prior year."Cap rates for the net lease dollar store sector reached a three year low in the second quarter of 2020," says Randy Blankstein, President, The Boulder Group. "However, the dollar store sector remained priced at a discount to the overall net lease retail market."Cap rates for all three of the major dollar store retailers (Dollar General, Family Dollar and Dollar Tree) compressed during this time frame. Cap rates for Dollar General, Family Dollar and Dollar Tree compressed by 15, 10 and 7 basis points respectively."Throughout the majority of 2020, dollar stores represented an important niche within the net lease sector as they were categorized as essential retailers during the Covid-19 pandemic," adds Jimmy Goodman, Partner, The Boulder Group. "Investors, especially those in 1031 exchanges, pursued dollar store assets over other net lease options as dollar stores were open for business, experienced high sales volumes and had financing available."The increased demand for this sector is the primary contributing factor for the decrease in cap rates. Furthermore, the median remaining lease term for available properties during the second quarter increased by one year to approximately eleven years.
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