2018 Retail Sales Volume & Cap Rates

Single-tenant retail sales volume versus average cap rates, updated quarterly.

Sales volume vs. average cap rates

Source: Stan Johnson Co. Research, Real Capital Analytics

The single-tenant retail sector saw sales volume dip in first quarter 2018. Down 25.7 percent from the same period last year, less than $3.2 billion was reported in the first three months of 2018. Compared to the other asset classes, retail outpaced the $2.8 billion reported in the office sector, while the industrial sector contributed nearly half of the quarter’s total volume with almost $5.3 billion in sales. Single-tenant retail continued to boast the lowest cap rates across the market, with an average of 6.2 percent. Rates have been fluctuating only slightly over the last two years, and despite a single basis point increase in the last three months, there has been no discernable or sustained uptick quite yet. Retail sales in first quarter were dominated by private buyers–71 percent of all retail transactions included a private buyer, and while they have been the predominate buyer type in recent years, we saw public REITs pull back and domestic institutional buyers give up market share in the early months of the year.

Focusing on business development, industry and client-specific research, and the analysis of local and national market trends, Lanie Beck has been the Director of Research for Stan Johnson Co. since 2013.

—Posted on May 15, 2018


Sales volume vs. average cap rates

Source: Stan Johnson Co. Research, Real Capital Analytics

The last two years have seen a single-tenant retail market in flux. Sales volumes have been see-sawing between much higher than average totals–in Q1 and Q3 2017, for example–and some of the lowest volume quarters on record in the last five years–Q2 and Q4 2017. Despite the fluctuation, the retail sector managed to report respectable sales volume totals for the year, reporting $14.8 billion. Despite it being the lowest annual total since 2013, we do not expect to see this downward trend continue. Instead, sales should rebound in 2018 as pent up demand drives transaction volume this year. Average cap rates in the single-tenant retail sector have essentially bottomed out. After reaching a low point of 6.1 percent in Q3 2016, the following five quarters have seen rates inch up and down insignificantly. By year-end 2018, we expect to see average retail cap rates noticeably moving in an upward trajectory.

Focusing on business development, industry and client-specific research, and the analysis of local and national market trends, Lanie Beck has been the Director of Research for Stan Johnson Co. since 2013.

—Posted on Feb. 21, 2018