net lease trends: market snapshot - stan johnson …info.stanjohnsonco.com/rs/702-xmw-307/images/net...

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Net Lease Trends:Market Snapshot

Q1 2017

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Table of Contents• Economy 3

– Economy 4

• Single-Tenant Overall Market 9– Overall Market 10– Overall Market by Property Type 15

• Single-Tenant Office 24– Overall Office Market 25– Office Market by Region 30

• Single-Tenant Industrial 34– Overall Industrial Market 35– Industrial Market by Region 40

• Single-Tenant Retail 44– Overall Retail Market 45– Retail Market by Region 50– Retail Market by Tenant Type 53

Click on a section title or page number to jump to the page

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Economy

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EconomyGross Domestic Product (GDP) & Unemployment Rate

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Gross Domestic Product (GDP)

Unemployment Rate

Source: Stan Johnson Company Research, U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis; shaded area indicates U.S. recession

March 2017: 4.5%Q1 2017: $18,869B

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EconomyConsumer Price Index (CPI) & 10 Year Treasury Rate

Consumer Price Index (CPI)

10 Year Treasury Rate

Source: Stan Johnson Company Research, U.S. Bureau of Labor Statistics, U.S. Federal Reserve; shaded area indicates U.S. recession

March 31, 2017: 2.40%March 2017: 243.8

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EconomyConstruction Spending & Retail Sales

$500,000

$750,000

$1,000,000

$1,250,000

$1,500,000

Construction Spending

$100,000

$200,000

$300,000

Retail & Food Services Sales

Source: Stan Johnson Company Research, U.S. Bureau of the Census; shaded area indicates U.S. recession; data is seasonally adjusted

March 2017: $193.2mFebruary 2017: $1,192.8m

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EconomyConsumer Confidence Index & Dow Jones Industrial Average

Consumer Confidence Index

10,000

15,000

20,000

25,000

Dow Jones Industrial Average

Source: Stan Johnson Company Research, OECD, S&P Dow Jones Indices; shaded area indicates U.S. recession

March 2017: 20,663Q1 2017: 100.5

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Single-Tenant Overall Market

Overall Market

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Sales Volume & Cap RatesSingle-Tenant, All Property Types

Source: Stan Johnson Company Research, Real Capital Analytics; analysis includes sales greater than $2.5m

Quarterly Sales Volume (in billions) vs. Average Cap Rates

Sales Volume (in billions) Average Cap Rate

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Sales Volume & Cap RatesSingle-Tenant, All Property Types

Annual Sales Volume (in billions) vs. Average Cap Rates

Sales Volume (in billions) Average Cap Rate

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Average Price Per Square FootSingle-Tenant, All Property Types

Average Price Per Square Foot

Q1 2017: $155.63 psf

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Annual Buyer DistributionSingle-Tenant, All Property Types

Source: Stan Johnson Company Research, Real Capital Analytics; analysis includes sales greater than $2.5m; graphs may not total 100 percent due to rounding.

19%46%

YTD 2017

Overall Market by Property Type

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Sales Volume (in millions)

Property Type Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Office $4,097.0 $5,117.7 $5,140.1 $4,957.6 $5,125.2 $8,198.9 $4,526.3

Industrial $3,518.0 $8,550.5 $3,527.6 $4,556.0 $3,938.0 $5,450.0 $3,440.9

Retail $4,693.7 $5,059.7 $3,231.6 $3,332.8 $3,507.9 $4,582.2 $3,465.7

Total Market $12,308.7 $18,727.9 $11,899.2 $12,846.4 $12,571.2 $18,231.1 $11,432.9

Quarterly Market StatisticsSingle-Tenant by Property Type

Average Cap Rates

Property Type Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Office 6.92% 6.79% 6.76% 6.68% 6.63% 6.73% 6.68%

Industrial 6.94% 6.90% 6.85% 6.82% 6.81% 6.74% 6.64%

Retail 6.02% 5.96% 5.96% 5.92% 5.93% 6.00% 6.01%

Total Market 6.32% 6.25% 6.23% 6.18% 6.18% 6.23% 6.24%

Source: Stan Johnson Company Research, Real Capital Analytics; analysis includes sales greater than $2.5m; total market statistics may not equal the sum of individual property types due to rounding

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Property Type 2011 2012 2013 2014 2015 2016 YTD 2017

Office $8,404.8 $11,682.1 $16,706.3 $18,887.0 $22,098.4 $23,421.7 $4,526.3

Industrial $9,190.2 $12,166.3 $16,931.0 $16,641.2 $22,338.2 $17,471.6 $3,440.9

Retail $7,699.0 $10,734.8 $13,805.0 $16,553.5 $19,446.9 $14,654.5 $3,465.7

Total Market $25,294.0 $34,583.2 $47,442.3 $52,081.8 $63,883.6 $55,547.9 $11,432.9

Annual Market StatisticsSingle-Tenant by Property Type

Average Cap Rates

Property Type 2011 2012 2013 2014 2015 2016 YTD 2017

Office 7.71% 7.53% 7.18% 7.08% 6.79% 6.73% 6.68%

Industrial 8.05% 7.60% 7.63% 7.13% 6.90% 6.74% 6.64%

Retail 7.34% 7.02% 6.78% 6.32% 5.96% 6.00% 6.01%

Total Market 7.56% 7.23% 7.00% 6.62% 6.25% 6.23% 6.24%

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Annual Sales VolumeSingle-Tenant by Property Type

$10,000.0

$20,000.0

$30,000.0

$40,000.0

$50,000.0

$60,000.0

$70,000.0

Annual Sales Volume (in millions)

U.S. Single-Tenant Office U.S. Single-Tenant Industrial U.S. Single-Tenant Retail

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Q1 2017 Sales VolumeSingle-Tenant by Property Type

$4,526.3

$3,440.9 $3,465.7

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

$4,500.0

$5,000.0

Current Quarter Sales Volume (in millions)

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Cap Rates vs. 10 Year TreasurySingle-Tenant by Property Type

Quarterly Average Cap Rates vs. 10 Year Treasury Rate

U.S. Single-Tenant Office U.S. Single-Tenant Industrial U.S. Single-Tenant Retail 10 Year Treasury Rate

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Average Price Per Square FootSingle-Tenant by Property Type

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Buyer DistributionYTD 2017 Single-Tenant by Property Type

U.S. Single-Tenant Office

U.S. Single-Tenant Industrial1%

U.S. Single-Tenant Retail

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Single-Tenant Office

Overall Office Market

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Sales Volume & Cap RatesSingle-Tenant, Office

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$8,000.0

$9,000.0

Quarterly Sales Volume (in millions) vs. Average Cap Rates

Sales Volume (in millions) Average Cap Rate

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Sales Volume & Cap RatesSingle-Tenant, Office

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

Annual Sales Volume (in millions) vs. Average Cap Rates

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Average Price Per Square FootSingle-Tenant, Office

Q1 2017: $306.37 psf

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Annual Buyer DistributionSingle-Tenant, Office

YTD 2017

Office Market by Region

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Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic $247.3 $688.9 $954.3 $306.1 $959.6 $1,043.7 $184.6

Midwest $540.0 $587.2 $476.9 $297.1 $743.7 $578.9 $307.7

Northeast $834.1 $1,192.6 $1,375.7 $2,631.1 $625.4 $1,320.0 $1,861.6

Southeast $536.0 $818.2 $443.8 $472.5 $473.1 $939.6 $347.6

Southwest $384.4 $846.8 $373.0 $293.1 $845.5 $1,951.7 $423.3

West $1,555.2 $984.0 $1,516.4 $957.7 $1,478.0 $2,365.0 $1,401.5

Total Office $4,097.0 $5,117.7 $5,140.1 $4,957.6 $5,125.2 $8,198.9 $4,526.3

Quarterly Market StatisticsSingle-Tenant Office, by Region

Average Cap Rates

Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic 7.13% 7.16% 7.08% 6.92% 6.42% 6.68% 6.58%

Midwest 7.26% 7.28% 7.44% 7.29% 7.30% 7.18% 7.07%

Northeast 6.09% 5.79% 5.62% 5.54% 5.87% 5.72% 6.55%

Southeast 7.14% 6.97% 6.92% 7.19% 7.01% 7.23% 7.01%

Southwest 6.97% 6.97% 6.86% 6.93% 6.71% 6.82% 7.01%

West 6.71% 6.38% 6.45% 6.25% 6.20% 6.23% 6.04%

Total Office 6.92% 6.79% 6.76% 6.68% 6.63% 6.73% 6.68%

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Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic $1,662.1 $721.2 $1,694.9 $1,596.9 $2,272.1 $3,263.7 $184.6

Midwest $1,157.6 $1,461.4 $2,108.7 $2,339.3 $2,926.8 $2,096.7 $307.7

Northeast $1,059.4 $2,611.6 $4,232.0 $5,644.2 $4,142.9 $5,952.2 $1,861.6

Southeast $1,135.0 $1,167.5 $1,780.2 $2,531.6 $2,885.4 $2,328.9 $347.6

Southwest $1,960.0 $1,432.7 $2,819.3 $2,556.4 $3,866.5 $3,463.3 $423.3

West $1,430.6 $4,287.7 $3,985.5 $4,218.5 $6,004.8 $6,317.0 $1,401.5

Total Office $8,404.8 $11,682.1 $16,706.3 $18,887.0 $22,098.4 $23,421.7 $4,526.3

Annual Market StatisticsSingle-Tenant Office, by Region

Average Cap Rates

Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic 7.76% 7.92% 6.70% 7.06% 7.16% 6.68% 6.58%

Midwest 7.84% 7.80% 7.53% 7.63% 7.28% 7.18% 7.07%

Northeast 6.99% 7.49% 6.61% 6.67% 5.79% 5.72% 6.55%

Southeast 7.96% 8.11% 7.82% 7.38% 6.97% 7.23% 7.01%

Southwest 8.10% 7.61% 7.40% 7.24% 6.97% 6.82% 7.01%

West 7.31% 6.77% 6.53% 6.63% 6.38% 6.23% 6.04%

Total Office 7.71% 7.53% 7.18% 7.08% 6.79% 6.73% 6.68%

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Single-Tenant Industrial

Overall Industrial Market

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Sales Volume & Cap RatesSingle-Tenant, Industrial

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$8,000.0

$9,000.0

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Sales Volume & Cap RatesSingle-Tenant, Industrial

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

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Average Price Per Square FootSingle-Tenant, Industrial

Q1 2017: $76.52 psf

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Annual Buyer DistributionSingle-Tenant, Industrial

16%47%

YTD 2017

Industrial Market by Region

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Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic $298.4 $906.6 $588.7 $360.2 $375.0 $349.9 $206.0

Midwest $753.3 $1,699.5 $544.0 $958.0 $684.2 $1,257.8 $638.5

Northeast $390.5 $885.4 $378.9 $320.1 $301.0 $623.0 $316.5

Southeast $792.2 $1,392.0 $552.7 $747.1 $575.5 $1,050.3 $619.1

Southwest $351.0 $1,177.7 $357.5 $600.0 $809.2 $667.9 $572.5

West $932.7 $2,489.2 $1,105.6 $1,570.5 $1,178.8 $1,357.4 $1,088.3

Total Industrial $3,518.0 $8,550.5 $3,527.6 $4,556.0 $3,938.0 $5,450.0 $3,440.9

Quarterly Market StatisticsSingle-Tenant Industrial, by Region

Average Cap Rates

Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic 7.43% 7.00% 6.76% 6.37% 6.11% 6.26% 6.40%

Midwest 7.56% 7.68% 7.50% 7.43% 7.27% 7.14% 7.17%

Northeast 6.93% 6.76% 6.65% 6.62% 6.62% 6.52% 6.33%

Southeast 7.14% 7.07% 7.04% 7.20% 7.46% 7.26% 7.14%

Southwest 7.16% 7.15% 7.18% 6.98% 7.04% 6.82% 6.87%

West 6.26% 6.17% 6.17% 6.08% 6.02% 5.98% 5.75%

Total Industrial 6.94% 6.90% 6.85% 6.82% 6.81% 6.74% 6.64%

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Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic $826.8 $1,209.4 $2,004.6 $1,498.9 $2,301.4 $1,673.8 $206.0

Midwest $2,122.6 $2,412.3 $4,193.2 $4,252.3 $4,549.0 $3,444.0 $638.5

Northeast $838.6 $907.0 $1,914.6 $1,314.7 $2,231.1 $1,623.1 $316.5

Southeast $1,956.0 $2,357.9 $2,350.5 $3,310.8 $4,268.0 $2,925.6 $619.1

Southwest $1,075.8 $1,357.5 $2,162.1 $2,202.0 $2,806.5 $2,434.6 $572.5

West $2,370.4 $3,922.2 $4,306.0 $4,062.6 $6,102.3 $5,212.3 $1,088.3

Total Industrial $9,190.2 $12,166.3 $16,931.0 $16,641.2 $22,338.2 $17,471.6 $3,440.9

Annual Market StatisticsSingle-Tenant Industrial, by Region

Average Cap Rates

Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic 8.11% 7.97% 7.20% 7.40% 7.00% 6.26% 6.40%

Midwest 8.71% 8.24% 7.79% 7.15% 7.68% 7.14% 7.17%

Northeast 8.31% 7.61% 7.76% 7.16% 6.76% 6.52% 6.33%

Southeast 8.50% 7.82% 7.94% 7.40% 7.07% 7.26% 7.14%

Southwest 7.78% 7.68% 7.85% 7.79% 7.15% 6.82% 6.87%

West 7.54% 6.95% 7.11% 6.47% 6.17% 5.98% 5.75%

Total Industrial 8.05% 7.60% 7.63% 7.13% 6.90% 6.74% 6.64%

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Single-Tenant Retail

Overall Retail Market

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Sales Volume & Cap RatesSingle-Tenant, Retail

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$8,000.0

$9,000.0

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Sales Volume & Cap RatesSingle-Tenant, Retail

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

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Average Price Per Square FootSingle-Tenant, Retail

Q1 2017: $258.23 psf

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Annual Buyer DistributionSingle-Tenant, Retail

43%44%

YTD 2017

22%55%

Retail Market by Region

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Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic $491.1 $330.0 $256.3 $286.4 $127.3 $307.4 $151.7

Midwest $696.7 $896.5 $689.9 $460.8 $729.0 $1,718.8 $774.7

Northeast $1,059.4 $953.0 $600.4 $599.9 $606.3 $502.9 $518.5

Southeast $983.4 $702.5 $551.6 $854.8 $581.5 $736.4 $665.6

Southwest $426.8 $725.8 $401.5 $426.5 $561.5 $641.0 $425.8

West $1,036.2 $1,451.8 $649.4 $678.9 $902.4 $675.8 $929.4

Total Retail $4,693.7 $5,059.7 $3,231.6 $3,332.8 $3,507.9 $4,582.2 $3,465.7

Quarterly Market StatisticsSingle-Tenant Retail, by Region

Average Cap Rates

Region Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Mid-Atlantic 6.12% 6.09% 6.02% 6.02% 6.03% 6.08% 6.22%

Midwest 6.40% 6.31% 6.43% 6.48% 6.49% 6.55% 6.61%

Northeast 5.69% 5.71% 5.52% 5.34% 5.33% 5.28% 5.21%

Southeast 6.25% 6.14% 6.12% 5.97% 5.98% 6.07% 6.12%

Southwest 6.11% 6.02% 6.07% 6.00% 6.01% 6.07% 5.95%

West 5.49% 5.51% 5.48% 5.51% 5.53% 5.54% 5.62%

Total Retail 6.02% 5.96% 5.96% 5.92% 5.93% 6.00% 6.01%

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Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic $768.1 $961.0 $925.4 $1,465.3 $1,377.7 $977.4 $151.7

Midwest $1,353.6 $1,527.6 $3,035.3 $3,135.8 $3,148.9 $3,598.4 $774.7

Northeast $1,932.1 $2,012.8 $1,713.1 $2,672.2 $4,299.1 $2,309.5 $518.5

Southeast $1,348.6 $1,939.8 $3,387.0 $3,698.5 $3,159.3 $2,724.3 $665.6

Southwest $731.9 $1,047.3 $1,961.2 $1,809.5 $2,346.8 $2,030.4 $425.8

West $1,505.0 $2,977.2 $2,419.5 $3,361.1 $5,115.1 $2,906.5 $929.4

Total Retail $7,699.0 $10,734.8 $13,805.0 $16,553.5 $19,446.9 $14,654.5 $3,465.7

Annual Market StatisticsSingle-Tenant Retail, by Region

Average Cap Rates

Region 2011 2012 2013 2014 2015 2016 YTD 2017

Mid-Atlantic 7.18% 6.95% 7.01% 6.32% 6.09% 6.08% 6.22%

Midwest 7.50% 7.04% 6.90% 6.69% 6.31% 6.55% 6.61%

Northeast 7.28% 6.62% 6.21% 5.78% 5.71% 5.28% 5.21%

Southeast 7.47% 7.33% 6.93% 6.56% 6.14% 6.07% 6.12%

Southwest 7.71% 7.03% 7.14% 6.31% 6.02% 6.07% 5.95%

West 6.86% 6.78% 6.34% 5.97% 5.51% 5.54% 5.62%

Total Retail 7.34% 7.02% 6.78% 6.32% 5.96% 6.00% 6.01%

Retail Market by Tenant Type

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Average Cap RatesSingle-Tenant, Automotive

Source: Stan Johnson Company Research, CoStar Group

Advance Auto Parts AutoZone O'Reilly Auto Parts

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Average Cap RatesSingle-Tenant, Casual Dining Restaurants

Applebee's Buffalo Wild Wings Golden Corral IHOP Panera Bread

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Average Cap RatesSingle-Tenant, Dollar Stores

Dollar General Dollar Tree Family Dollar

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Average Cap RatesSingle-Tenant, Drugstores

CVS Rite Aid Walgreens

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Average Cap RatesSingle-Tenant, Quick Service Restaurants (Burgers & Chicken)

Burger King KFC McDonald's Wendy's

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Average Cap RatesSingle-Tenant, Quick Service Restaurants (Other)

Arby's Dunkin' Donuts Starbucks Taco Bell

going beyondLanie BeckDirector of Researchlbeck@stanjohnsonco.com

www.stanjohnsonco.com/research-library

©2017 Stan Johnson Company. All rights reserved. No part of this publication may be reproduced by any means without prior written permission of Stan Johnson Company. The information contained in this publication has been compiled from sources believed to be reliable. Stan Johnson Company accepts no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this publication.

net lease trends: market snapshot - stan johnson …info.stanjohnsonco.com/rs/702-xmw-307/images/net...

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