Property Types | Net Leased Overview
The realstreetEX Net-Leased Index Illustrates average going-in cap rates of Walgreens properties throughout the United States.
This information may be considered a baseline for assessing net-leased values in various markets.
| US Region | Locations | Cap | |
|---|---|---|---|
| Northeast | 2 | 5.85% | |
| Southcentral | 7 | 6.54% | |
| Southeast | 3 | 6.12% | |
| Midwest | 4 | 6.43% | |
| Northwest | 2 | 5.70% | |
| Southwest | 1 | 6.00% |
A “Net Leased” property is generally a commercial facility with a standing lease in place. A net lease usually includes a provision for the tenant to pay, in addition to rent, certain costs associated with the operation of the property. These costs may include property taxes, insurance, repairs, utilities and maintenance. There are also “NN” (double net) and “NNN” (triple net) leases. The difference between the three is the degree to which the tenant is responsible for operating costs.
Net leased investments are an excellent vehicle for enhancing wealth while simultaneously reducing credit risk and requiring minimal management responsibility. When acquired with professional guidance, net leased investments are an essential compliment to any sound real estate investment strategy.
Net Leased properties are considered by many to be the most liquid and secure real estate investments available. Now with the ability to "exchange" properties and deferring capital gains many investors view these as a “must.”
Credit-grade tenants are assigned a rating based upon the S&P credit scoring system. The net leased S&P “Credit” is inversely related to the net leased Capitalization Rate (CAP). Thus, the higher the net leased credit, the lower the net leased CAP and the lower the credit, the higher the net leased CAP. Here are a few observations:
Let us know if you need help performing a 1031 exchange or if you are looking for a net-leased investment property? Access our buyer’s form and tell us about your requirements.
Multi-family are housing units that accommodate more than one family or household. Multi-family investment properties are graded by number of units (size) and property quality.
A commercial property type maintained for or occupied by professional or business offices. Such properties typically house management and staff operations. The term office can refer to whole buildings, floors, parts of floors and office parks. Office space used for a variety of purposes sometimes is called generic office space. Office properties may be classified as A, B or C. Class A properties are the most functionally modern. Class B and C properties in the same market typically command lower rents because they are older and in need of modernization.
Retail or commercial properties cover a wide array of property types. Generally speaking, a retail or commercial property is used to market and sell consumer goods and services. Types of retail or commercial properties include:
A “Shopping Center” is a group of commercial establishments designed, built and managed as a unit to serve the immediate trade area. It provides on-site parking in proportion to the size, type and number of stores in the center.
A “Power Center” is a retail center dominated by several large anchors, including discount department stores, off-price stores, warehouse clubs or category killersÑstores that offer tremendous selection in a particular merchandise category at low prices. The center typically consists of several freestanding anchors and only a minimum number of specialty tenants.
A “Regional Center” is a retail center that provides general merchandise (a large percentage of which is apparel) and services in full depth and variety. Its main attractions are its anchors: traditional, mass merchant, discount department stores or fashion specialty stores. A typical regional center has parking surrounding the outside perimeter and is enclosed with an inward orientation of stores connected by a common walkway.
New developments typically include "open space" designs with streets and parking near each store for convenient access.
Commercial properties that are used for the purposes of production, manufacturing or distribution. Types of industrial properties include:
Hospitality properties are those which serve the needs of people who require lodging on a short-term basis. These include: