Limon Net Lease Group

dollar general deals

Is Rising Inflation a Concern for Real Estate Investors?

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Early signs of rising inflation are beginning to show up in the marketplace

  • Two main factors point to an increase in inflation over the short-term:
    • Government spending flooded the market with cash to offset the pandemic
    • Production pipelines thinned and supply chains can’t keep up

As a result, demand for goods/services is outpacing supply, driving prices up

  • Real estate is known as a strong hedge against inflation
    • Many lease terms include inflation escalation clauses that automatically lift rents
    • Leveraged returns are amplified in a rising inflation environment

Those looking to diversify their exposure to inflation risk, may find CRE as an attractive investment option

One Year Into COVID: The Light at the End of the Tunnel is Getting Brighter

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Numbers of March 10, 2021
Trailing 7-day average for daily Coronavirus cases

As we pass the one-year mark of the pandemic, the light at the end of the tunnel is getting brighter. The recently passed $1.9T stimulus combined with the ongoing vaccine rollout is boosting the 2021 outlook.

  • The hard-hit Hotel & Retail sectors will benefit as reduced restrictions encourage travel and shopping.
  • Apartment demand may strengthen as household formation re-invigorates amid rising job growth.
  • Strong momentum will likely continue for Industrial, though rising supply does pose some risk.
  • Vaccinated workers may accelerate the return to the Office, though the future of working remains unclear.

Economic Forecasts for 2021 Increasingly Optimistic

  • The recently passed third round of stimulus and the rising rate of vaccinations have bolstered the 2021 outlook
  • Economists are forecasting 2021 GDP growth from 5% up to 8.1%, which would be the highest growth since 1950
  • The pace of job recovery is expected to accelerate as vaccinations allow more states to loosen restrictions

Economic Recovery Will Bolster Hardest Hit Property Types

  • Vaccinations could encourage summer travel, raising Hotel occupancies and restoring some hospitality jobs
  • Reduced restrictions could help stabilize Retail, which had negative absorption of 26M sq. ft. last year

Stronger Outlook Provides New Tailwinds for CRE

  • Apartments could get a demand boost later in the year as job creation invigorates new household formation
  • Industrial is expected to maintain its strong momentum, but risk of elevated supply remains
  • While vaccinated workers can return to the Office; uncertainty remains on how quick that recovery will be

Sources: Marcus & Millichap Research Services, The New York Times, Bloomberg L.P.

Jesse Limon’s Top 40 List of National Tenants for 2021

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After a tumultuous year, and working on and with many 1031 exchange buyers and deals over the past decade, here’s my current Top 40 Tenants from an investment perspective with a goal of creating safe and secure yields over a long term:

1. Amazon/Whole Foods/etc
2. Dollar General
3. CVS/Pharmacy
4. FedEx
5. Walgreens
6. Family dollar/Dollar Tree
7. Walmart
8. McDonald’s
9. Chick-fil-A
10. Burger King
11. Taco Bell
12. KFC
13. Panera Bread
14. Home Depot
15. Lowe’s
16. 7-Eleven
17. Wawa
18. Starbucks
19. Five below
20. Schwarz Group/Lidl
21. Aldi
22. Burlington
23. Tractor Supply co
24. Ollies Bargain Outlet
25. Sherwin Williams
26. Harbor Freight Tools
27. AutoZone
28. Oreilly auto parts
29. Pet Suites of America
30. TJ maxx/Marshalls, HomeGoods, HomeSense, Sierra
31. BestBuy
32. Gap/Old Navy/Athleta
33. Chipotle
34. Ahold Delhaize/Stop & Shop/ Giant/Hannaford/Food Lion/
35. BJ’s Wholesale Club
36. TD Bank
37. Bank of America
38. Wells Fargo
39. Fifth Third Bank
40. Kohl’s

Let me know your thoughts or feedback and happy new year!

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