We're friends with some pretty smart people. This week we interviewed NNN expert Jacob Baratz, Associate Advisor with Marcus & Millichap. Valbridge Property Advisors: What are you seeing with cap rates (in terms of increasing, decreasing or holding steady)? Jacob: "Although transactional velocity has eased, pricing and yields have remained remarkably steady. The limited development during this cycle and balanced debt levels have kept cap rates relatively steady despite rising Interest Rates and tapering transactional activity. Although some buyers are choosing to postpone acquisition plans based on the belief that rising interest rates will push cap rates higher, very little elevation in cap rates has thus far emerged." Valbridge Property Advisors: What are you seeing for a spread versus treasuries and where does the market see them heading? Jacob: "The rapid 75-basis-point post-election surge in the 10-year treasury rate opened a disconnect between buyers and sellers as they attempted to reconcile higher lending costs. Since the beginning of the year, the 10-Year treasury rate has largely stabilized in the mid-two-percent range, but we anticipate rising inflation will cause the Federal Reserve to further tighten monetary policy – adding to the current rising interest rate climate. However, it should be noted that the alignment of cap rate and interest rate movement is far from linear, as demonstrated repeatedly over the last 10 years." Valbridge Property Advisors: What are some of the NNN properties you’ve seen lately that stand out? Jacob: "We believe rising wages will lift discretionary income and together with elevated consumer confidence, spur spending that will support demand for retail space – expanding grocery stores, casual dining restaurants and service based businesses (that cannot be supplanted by e-commerce) have filled retail centers and pushed vacancy rates to their lowest levels since 200." Valbridge Property Advisors: What are some up and coming NNN properties in your opinion?
Jacob: "Again, we believe that service based business will continue growth throughout 2017. These retailers, that cannot be replaced by e-commerce are likely to face steady demand – retailers like Advanced Auto Parts, AutoZone, O’Reilly."
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Summer is nearly in full swing and the Valbridge Property Advisors | Kansas City office is definitely taking notice! Below are some of our favorite summer hangouts: Stockton Lake Located approximately two hours south of Kansas City, Stockton Lake boasts camping, boating, fishing, and much more! This pristine lake is our Director of Operations, Joanne Montgomery's, favorite summer spot! Colorado Our Senior Managing Director, Laird Goldsborough, MAI loves travelling to Colorado every summer with his family. While there, they like to climb 1,400 ft mountains! Harry's Country Club When Garrett Connolly, one of our appraisers, wants good food and summer drinks, he heads to Harry's Country Club in The River Market! The Mississippi River Every summer, senior appraiser Tyler Siegworth goes to the Mississippi River for kayaking, swimming, and boating with his family! What's your favorite thing to do when it's hot out? Let us know in the comments below!
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