Investment in U.S. net-lease properties was close to pre-pandemic levels in the first quarter of 2021 — and northern New Jersey was among the Top 20 leading target markets for investors in the office and retail sectors — according to the latest research by CBRE.
The data was driven by three factors:
- Robust institutional acquisition activity;
- Resilient foreign investment;
- Increased interest in office assets as return-to-the-workplace plans gained momentum.
Karly Iacono, senior vice president for CBRE Capital Markets, said northern New Jersey continues to attract investors seeking high-growth opportunities, specifically in the office and retail sectors.
“Some of the largest four-quarter percentage gains occurred in New Jersey, which experienced a total volume of $356 million during Q1 2021 in office investment and $148 million in retail,” she said.
The success was not just limited to northern New Jersey.
Trenton saw a more than 600% increase in net-lease investment activity year-over-year, at $234 million, second in growth to only Provo, Utah, as net-lease investors are increasingly attracted to high-growth secondary and tertiary markets.
Net-lease properties are characterized by a lease structure in which the tenant agrees to pay a portion or all of the taxes, insurance fees and maintenance costs in addition to rent.
While net-lease investment activity (comprising office, industrial and retail properties) decreased by 2.6% year-over-year in Q1 2021, to $14.3 billion, volume was up by 10% from pre-pandemic Q1 2019. The decline for total U.S. commercial real estate volume in Q1 2021 was deeper, at 18.3% year-over-year.
The office sector’s share of total net-lease investment volume increased by 5.2 percentage points from Q1 2020, to 41.5%, with its largest first-quarter volume on record at nearly $6 billion. The industrial sector continued to attract the most net-lease capital, with its share remaining relatively unchanged at 43.4%, while the retail sector’s share fell 5.4 percentage points, to 15.1%.
To read the full report, click here.