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United States

Report | United States Net Lease Investment Outlook - Q3 2016

Summary

​Investor demand continues to rise and diversify for the net lease sector, as seen by the third quarter 2016 momentum. Single asset sales are up 3.5 percent year-over-year across sectors. This upward trend was driven by the office and industrial sectors, while retail sector sales have continued to decline. Net lease portfolio transactions have been constrained throughout 2016 following a peak year in 2015, a factor in overall net lease volume declines of 20.5 percent year-over-year.
 
Foreign interest grows: over one-third of all industrial acquisitions by foreign buyers were net lease assets and foreign acquisitions of net lease office assets are up 27.2 percent year-over-year. As cap rates continue to compress and deployment pressures increase for select buyer types, the pricing environment has deepened the transfer of buyers between primary and secondary markets. 
 
Changes in disposition activity have paralleled an evolving buyer landscape, with most net lease REITs now net sellers. Further changes in REIT activity can be expected following the GICS reclassification, expected to bring an estimated $100 billion of capital into the new sector as a result of enhanced transparency and fund reallocations.

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