Market Data from Recent Projects: a Net Lease Investment in South Dakota


A 2017 Assignment Involving a Net Lease Investment in South Dakota.

Mainland Valuation found that the market is active and investors are able to achieve slightly higher yields in this state when compared to other Midwest markets with denser population and development. The subject involved a ±90,000-square-foot net leased campus property that had a mix of office and classroom space. Comparable sales research and market participant interviews found that net lease investments with 10+ year remaining lease terms and strong credit tenants will command capitalization rates in the 6.5% to 7.5% range, while selling in three to six months. We found a 75 to 100 basis point premium is reasonable to apply to the aforementioned range in capitalization rates when a tenant is not perceived as a credit tenant. However, even on net lease investments involving non-credit tenants, when priced correctly, the market is active and these assets can expect to sell within six to nine months. Finally, investors in the net lease market also give consideration to replacement cost and market rent versus contract rent when buying these types of assets.

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