31 Mar 14 By Cole Flanagan, CPA, MBA No Comments

The Net-leased Environment & What’s Next

The push for solid investment real estate, particularly Net-Leased real estate, and the reach for yield has been driving activity across the nation, as well as in New Mexico.  Lack of supply of solid investment property has driven prices to all-time highs and CAP rates to all-time lows.  As demand continues to stay high and the economy appears to be improving, investors will begin to look to secondary and tertiary markets to meet their yield requirements, which bodes well for Albuquerque and New Mexico.

Just as apartments have begun to plateau, net-leased retail may be heading in the same direction, with prices having likely reached their highest premium.  That is not to say that the demand for net-leased retail has cooled, rather, the demand will continue and likely maintain the low CAP rates as supply is not likely to increase fast enough to meet demand.  In New Mexico, we are seeing increased demand and out-of-state investors, both private and institutional, are spreading their reach into the state to search for untapped opportunities.

As retail begins to flatten, all indications are that industrial, both net-leased and multi-tenant will likely be hitting on all cylinders to drive the next wave of strong demand.  While the Albuquerque market as a whole still has a vacancy rate above historical averages for industrial property, certain submarkets are seeing demand for growth and construction due to limited quality product.  As manufacturing, e-commerce, and jobs grow and industrial demand expands, the investment market for industrial properties will heat up.

Investment Property Advisors, www.IPArealty.com, is a uniquely positioned team of experts focused on providing market knowledge, insight, and opportunities in the investment arena in both New Mexico and across the nation.  The team is a division of NAI Maestas & Ward, a leading real estate services company in the state of New Mexico.  With strong relationships, market expertise, and a true focus on the investments, the Investment Property Advisors are poised to lead and set the market.