Net Lease News

B+E Weekly Newsletter

June 6 – June 12, 2023

MARKET

Stocks rise as hope builds Fed will pause rate hikes this week |  CNBC

• Stocks rose Monday as traders hope the Federal Reserve will skip hiking rates when the central bank decides on policy Wednesday. 
• The central bank will ultimately decide to skip a rate hike for June, but the Fed likely isn’t done raising rates overall.
• Tuesday’s inflation data could help reinforce the case that inflation is subsiding, as economists expect the consumer price index to show inflation dropping to a 4% annual rate in May. That’s down from 4.9% in the prior month.

Why Net Lease Continues To Draw Investors | GlobeSt

• The net lease retail sector continues to outperform despite changing interest rates, with a growing number of retailers expanding their footprints or developing new properties against a “compelling” cap rate environment.
• The current market is seeing a lot of activity in sale-leaseback and will be bullish on net lease retail moving forward.
• Many retailers continue to aggressively expand in their markets and with interest rates moving upward, investors are looking for slightly higher cap rates.

INDUSTRIAL

Industrial Rents, Sale Prices Continue to Rise | Globe St

• The industrial property market in the U.S. appears to be slowing somewhat amid economic uncertainty, but in-place rents on current leases are rising, average sale prices continue to increase, and industrial property values – though lower – are still higher than for most other property classes.
• The report notes that occupier demand and absorption are cooling because of the effect of inflation on consumer spending and recession fears. The e-commerce and brick-and-mortar retail segments are trying to conserve cash and reduce space needs.
• Nevertheless, in-place industrial rents rose an average of three cents to $7.18 per square foot from March to April, up 7.3% from the previous year. The average rate of new leases signed in the past year through April climbed to $9.58 per square foot, $2.40 more than the average for all leases.

WinCo Grocery Chain Plans Large Distribution Center | CoStar

• WinCo Foods Inc. proposed a large warehouse in central Washington to accommodate the supermarket chain’s growth in the Pacific Northwest. The company plans for a 1.1 million-square-foot warehouse on more than 100 acres in Ellensburg, Washington, about 100 miles southeast of Seattle.
• Discounters such as the small-format Aldi chain and Grocery Outlet were among the fastest-growing supermarket chains in the United States last year.
• The discount grocer opened a second store in Tacoma in February, giving the chain 24 locations in Washington. WinCo has large concentrations of retail stores in California, Oregon, and Idaho, and several locations each in Arizona, Texas, Oklahoma, Utah, and Montana.

Volvo’s Autonomous Freight Arm Opens North American Hub in Texas | CoStar

• Volvo Autonomous Solutions is setting up its new North American office in Fort Worth, Texas, with plans to begin manual operations in preparation for commercial autonomous transport throughout the Lone Star State.
• The autonomous vehicle arm of Sweden-based Volvo Group is working to set up its first North American autonomous freight corridors to run from Dallas-Fort Worth to El Paso and from Dallas to Houston.
• The western side of Dallas-Fort Worth, the nation’s fourth-largest metropolitan area with more than 7.7 million residents, has become a hub for autonomous vehicles and mobility innovations.

RETAIL

Dave & Buster’s To Change Up Main Event’s Real Estate With Sale-Leaseback Deals | CoStar

• Dave & Buster’s Entertainment, an experiential restaurant chain known for its games and arcades, is expanding its portfolio and changing up the structure of some of its real estate with future sale-leaseback deals for Main Event locations.
• Dave & Buster’s plans to open 16 new stores this fiscal year, including some Main Event locations through sale-leaseback deals.
• The Dallas-area company plans to launch the first Main Event sale-leaseback deal with a location in Murfreesboro, Tennessee.

Subway Signs Multi-Unit Deals as Sale Stalls to Sell Brand | Franchise Times

• Who ends up buying Subway and when a new owner is named remain the big unknowns as the long-anticipated deal to sell the world’s largest restaurant brand is apparently being held up by a potentially inflated price tag and perhaps just bad timing.
• Subway recently announced deals with five multi-unit franchising groups in Texas, Florida, Arizona, and the mid-Atlantic states that have so far consolidated or acquired 230 restaurants.
• Subway hopes the remodels and relocations, along with potential for new locations, can help improve operator profitability and its overall market position as it continues to court buyers, including private equity groups, in a deal that reportedly values the chain between $7 billion and $10 billion.