GROCERY STORES CAP RATES - Calkain Companies
CALKAIN RESEARCH
RESEARCH SNAPSHOT: GROCERY STORE CAP RATES
N
et lease grocery stores are a major player in the NNN market. Their focus on staple products and central locations are the definition of a stable asset. While other retailers with large foot prints couldn’t weather the recession (Circuit City) net lease grocery stores made it through relatively unscathed.
GROCERY STORES CAP RATES 9.00% 8.00% 7.00% All NNN Cap Rates
6.00%
Like all real estate, location is central to a grocer’s success. However, unlike other sectors such as office or traditional retail, there it not a strong temptation to overbuild. Grocery stores inhabit a very stable area of the consumer’s basket. A recession may force customers to cut back on casual dining and weekend shopping but milk and bread will still be bought. For these reasons cap rates for grocery stores have recently compressed at a faster rate than the rest of the net lease market. Investors are demanding stable, recession proof assets and grocery stores fit this bill perfectly.
Grocery NNN Cap Rates T Bills (Nominal 10 Yr)
5.00% 4.00% 3.00%
2008
2009
2010
2011
Year
GRAPH DATA Year
2008
2009
2010
2011
Overall NNN
7.10%
8.00%
7.88%
7.75%
Grocery NNN
7.48%
8.57%
7.93%
7.81%
T Bills
3.66%
3.26%
3.22%
3.46%
F OR MORE INFORMAT I O N WINSTON ORZECHOWSKI | Research Director Calkain Companies, Inc. Tel. (703) 787-4714 | Fax (703) 787-4783 [email protected]
w w w. c a l k a i n . c o m
CALKAIN COMPANIES, INC.
WASHINGTON, DC FLORIDA MARYLAND DELAWARE BOSTON
RESEARCH SNAPSHOT: GROCERY STORE CAP RATES
N
et lease grocery stores are a major player in the NNN market. Their focus on staple products and central locations are the definition of a stable asset. While other retailers with large foot prints couldn’t weather the recession (Circuit City) net lease grocery stores made it through relatively unscathed.
GROCERY STORES CAP RATES 9.00% 8.00% 7.00% All NNN Cap Rates
6.00%
Like all real estate, location is central to a grocer’s success. However, unlike other sectors such as office or traditional retail, there it not a strong temptation to overbuild. Grocery stores inhabit a very stable area of the consumer’s basket. A recession may force customers to cut back on casual dining and weekend shopping but milk and bread will still be bought. For these reasons cap rates for grocery stores have recently compressed at a faster rate than the rest of the net lease market. Investors are demanding stable, recession proof assets and grocery stores fit this bill perfectly.
Grocery NNN Cap Rates T Bills (Nominal 10 Yr)
5.00% 4.00% 3.00%
2008
2009
2010
2011
Year
GRAPH DATA Year
2008
2009
2010
2011
Overall NNN
7.10%
8.00%
7.88%
7.75%
Grocery NNN
7.48%
8.57%
7.93%
7.81%
T Bills
3.66%
3.26%
3.22%
3.46%
F OR MORE INFORMAT I O N WINSTON ORZECHOWSKI | Research Director Calkain Companies, Inc. Tel. (703) 787-4714 | Fax (703) 787-4783 [email protected]
w w w. c a l k a i n . c o m
CALKAIN COMPANIES, INC.
WASHINGTON, DC FLORIDA MARYLAND DELAWARE BOSTON
