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Research - JULY 29, 2021

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Cap Rates for net-lease dollar-store properties compress to historic levels

by Andrea Zander

In the second quarter, national asking cap rates in the single tenant dollar-store sector compressed to 6.11 percent, according to The Boulder Group in its Net Lease Dollar Store Report. This represents an 87-basis-point increase when compared with the prior year.

"Cap rates for in the dollar store sector reached new historic low levels for Dollar General and Dollar Tree," said Randy Blankstein, president, The Boulder Group.

According to the report, Dollar General cap rates compressed 115 basis points to 5.75 percent, while Dollar Tree compressed to 53 basis points to 6.5 percent. Family Dollar compressed 30 basis points to 6.85 percent. Dollar General accounted for the majority of the dollar-store supply (82 percent) on the market.

"Throughout the course of the COVID-19 pandemic, investor demand in the dollar store sector increased to record levels," adds Jimmy Goodman, partner, The Boulder Group.

The primary contributing factor for the cap rate

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