New development fuels net-lease auto sector
National asking cap rates in the single-tenant net-lease auto sector decreased to 5.89 percent in the fourth quarter, according to the 2020 Net Lease Auto Report, by The Boulder Group. This represented a decrease of 48 basis points when compared to the prior year. The auto sector consists of various auto-related tenants in the parts, service and collision sectors.
“The primary reason contributing to the substantial decrease in cap rates was an increase in supply of new construction properties with longer term leases,” said Randy Blankstein, president of The Boulder Group.
According to the report, the new development supply was primarily concentrated in the service and collision sectors, as these tenants continue to expand their footprints nationally. In recent years, new store development for the auto parts sector has lagged behind historical standards, which has limited the supply of long-term leased properties in the auto parts sector. In fourth quarter 2020, the