Net Takeaways with Feller, Harf, and Team
March 2025 Market Commentary Written by: BJ Feller | Senior Vice President & Managing Director | bfeller@northmarq.com
On paper, cap rates look stable. In reality, the composition of what’s selling has changed. The only deals trading are the ones investors actually want—long-term leases, bulletproof tenants, prime locations. So when you see data that says “cap rates have peaked,” take a beat. The reality is that cap rates are still rising on transactions that close, and weaker deals are simply opting out of the game. NNN Inventory Has Doubled—And No One’s Tracking It Here’s a fun fact: Over the past 36 months, NNN retail inventory has skyrocketed from $13.1 billion to $28.0 billion. But if you go looking for a consolidated dataset from major research firms? Good luck. So we built it ourselves. $30B $28B $26B $24B $22B $20B $18B $16B $14B $12B $10B Jan 22 Apr 22 Jul 22 Oct 22 Jan 23 Apr 23 Jul 23 Oct 23 Jan 24 Apr 24 Jul 24 Oct 24 $20.1B $22.2B $28.0B NET LEASE CAP RATES ARE FALLING: BUT NOT WHY YOU THINK $13.1B What we’re seeing: •More product than ever is hitting the market •Transaction volume hasn’t kept pace. •More deals are sitting, more sellers are pulling back. The industry is treating this like a normal market slowdown. It’s not. It’s an inventory explosion, and it’s reshaping liquidity in real-time. The days of a “just list it and it will trade” mentality? Gone. The Economic Crosswinds: Interest Rates, Consumer Sentiment, and Walmart’s Reality Check If cap rates are the market’s heartbeat, interest rates are the blood pressure monitor. And right now, inflation is kicking rates right back up. •Inflation just reaccelerated. Not what the Fed wanted to see. •Consumer sentiment just dropped to a 4-year low. Also not great. •Walmart’s earnings confirmed that consumers are pulling back on discretionary spending. None of these bode well for leveraged acquisitions, and none of them suggest that rate cuts are around the corner. For those waiting on 5% money to come back: pack a lunch. NNN Insights by Bryn Feller
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