Spending priorities favor single-tenant. The outlook for dining and necessity retail remains positive as summer approaches, despite a flat trend in overall consumer spending. Continued inflation, labor market concerns and high interest rates are influencing households to prioritize social interactions over big ticket items that were popular during lockdowns. In March, restaurant and bar spending was up 13 percent annually, a sign consumers continue to frequent quick service restaurants and fast casual chains, including Chipotle and Noodles & Company, as their budgets reduce. Households are also concentrating their spending on essential goods. In the first quarter, sales in stores — not including restaurants — were up more than 4 percent year-over-year. The divergence between these segments’ performance and overall retail spending has positive implications for net-leased fundamentals at a time when single-tenant vacancy is historically low.

Key Features Include:

  • Demand drivers that will preserve low vacancy and record asking rents
  • Impact of labor market resiliency on household spending, wage growth and credit card usage
  • Analysis of single-tenant property types and net-leased cap rates by brand
  • Local and regional banks’ heightened role in single-tenant lending

Marcus & Millichap’s Full Report:
Single-Tenant Retail Sector on Solid Footing as Vacancy Remains Limited Across Market and Property Types