September 10, 2019
U.S. net-lease investment is outpacing the broader commercial real estate market in 2019, with Greater Los Angeles among the leading target markets for investors, according to the latest research from CBRE. Southern California placed second only behind New York City for net-lease investment in Q2 2019 with a total volume of $1.22 billion, up 62% year-over-year. For the year-ending Q2 2019, net-lease investment in Greater LA totaled $4.73 billion, up 69% year-over-year.
CBRE’s Sterling Champ says, “The Los Angeles region’s strong economy, dense infill markets, consistently low vacancy rates and upward rent growth have made net-leased investments very attractive compared with many other national markets. We are seeing high demand from domestic as well as foreign buyers, looking for investments that provide security and stable long-term growth.”
Champ notes, “There is very little risk in purchasing Southern California net-leased investments, and the little risk is reflected in lower cap rates and higher prices, compared with many other national markets. Even so, this pricing differential is not reducing the ongoing high demand for property in these Southern California markets.”
Investors are increasingly focused on net-lease investment opportunities in high-growth secondary markets. While gateway markets like San Francisco and Boston had the largest year-over-year gains in investment volume in Q2 2019, other Southern California markets such as the Inland Empire and San Diego made the top-10 list.
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