The entire net lease market has seen compressing cap rates. The combination of multiple factors has led to this declining cap rate environment. First, we have seen that low interest rates and a low yield investment environment has impacted cap rates. Because cheap debt is available and the risk free investment returns are so low, investors are able to pay premuims (lower cap rates) for net lease assets and still achieve a spread that is appealing in today's market.
There is limited net inventory availble due to the fact that retail slowed their expansion and growth plans since 2008. Coupled with a flight to quality by investors the simple fundamentals of supply and demand are driving cap rates lower.
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