In the first quarter, national asking cap rates in the single tenant casual dining sector increased to 6.73 percent, according to the 2021 Net Lease Casual Dining Report by The Boulder Group. This represented a 14-basis-point increase when compared with the prior year.
The economic impact from COVID-19 within the restaurant industry caused cap rates for casual dining properties to increase. In the first quarter of 2021, single-tenant casual dining properties were priced at an 82-basis-point discount to the overall net-lease retail market. Cap rates in the casual dining sector increased by 14 basis points year-over-year, while the overall net-lease retail contracted by 24 basis points.
“Throughout the pandemic, net lease investors targeted tenants with strong balance sheets” said Randy Blankstein, president, The Boulder Group. “This was especially true for the casual dining sector which experienced a tremendous amount of turmoil, particularly in mid-2020.