Investors Are Flocking to Essential Use Retailers

Properties occupied by essential use tenants have quickly become coveted investment opportunities during the pandemic. Not only have these assets held value, some have actually seen cap rate compression. SRS Real Estate Partners’ recent VCA Animal Hospital deal in Fountain Valley is a prime example. The property traded hands for $9.2 million and a 4.75% cap rate, the lowest cap rate in the nation for a VCA-occupied property.

“Demand has remained robust for essential uses and corporate-credit tenants in quality locations,” Matthew Mousavi, managing director of the national net lease group at SRS, tells GlobeSt.com. “The single-tenant VCA that we sold had stellar real estate on the 405 and VCA is owned by the Mars family of companies, so it had good credit. COVID or not, you are going to have demand for that type of real estate. We continue to see activity for those types of deals. That is where the demand is.”