The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the activity in the National Net Lease Big Box Market.

1. www.bouldergroup.com
Q4 2015
THE NET LEASE
BIG BOX REPORT
Q4 2014 Q4 2015 Basis Point
(Previous) (Current) Change
6.71% 6.08% -63
BIG BOX VS. NET LEASE SECTOR
MEDIAN ASKING CAP RATE
Q4 2014 Q4 2015
Sector (Previous) (Current)
Big Box 6.71% 6.08%
Retail Net Lease Market 6.50% 6.25%
Differential (bps) +21 -17
BIG BOX MEDIAN ASKING CAP RATE
BY CREDIT RATING
MARKET OVERVIEW
Cap rates in the single tenant net lease big box sector compressed
from the fourth quarter of 2014 to the fourth quarter of 2015 by 63
basis points to a 6.08% cap rate. The compression achieved by
the big box sector was significantly greater than that of the entire
net lease retail sector. From the fourth quarter of 2014 to the fourth
quarter of 2015, the net lease retail sector compressed by only 25
basis points. As a result, the fourth quarter of 2015 represented the
first time since 2010 that the big box sector was priced at a premium
to the entire retail net lease market.
Much of the compression experienced in the big box sector can
be derived from the influx of Walmart Neighborhood Market
properties that were introduced to the market throughout 2015.
There was over a 200% increase in Walmart Neighborhood Market
properties available in the fourth quarter of 2015 when compared to
the prior year. Walmart Neighborhood Market properties made up
approximately 22% of the overall big box sector and are investment
grade rated. The median asking cap rate for Walmart Neighbor-
hood Market properties was 5.10% leading to much of the cap rate
compression within this sector.
The median asking price for net lease big box properties was $9
million in the fourth quarter. This figure was even higher for properties
tenanted by investment grade rated companies at approximately
$12 million. Big box properties tenanted with investment grade rated
tenants command a 155 basis point premium over those without.
However, only 40% of the sector’s supply is tenanted by investment
grade tenants. The majority of investors prefer investment grade
properties as they are easier to finance.
It is expected that investors will continue to target long term leased
big box properties with investment grade tenants. However, it
should be noted that there is a lack of development and expansion
for the major tenants in this sector excluding Walmart Neighborhood
Market. With limited new development, investors may seek vintage
properties recently backfilled with new big box users or properties
with extended leases. Investors will be carefully monitoring the
tenant’s most recent store prototype footprints as retailers continue
to shift the size of their stores. Short term leased properties or
non-credit tenants will garner interest due to the increased yield
if the properties exhibit strong real estate fundamentals or high
residual values.
BIG BOX ASKING CAP RATE COMPARISON
Investment Grade Non-Investment Grade Basis Point
Cap Rate Cap Rate Spread
5.20% 6.75% 155
BIG BOX PROPERTIES MEDIAN
ASKING PRICE
Average Average Price
Sector Price Per SF
Investment Grade $11,990,118 $255
Non-Investment Grade $7,500,000 $150

2. www.bouldergroup.com
Q4 2015
THE NET LEASE
BIG BOX REPORT
BIG BOX MEDIAN ASKING CAP RATE BY REGION
MEDIAN ASKING CAP RATES
BY SQUARE FOOTAGE
MEDIAN ASKING CAP RATE BY
LEASE TERM REMAINING
Percentage
Sector SF Range Cap Rate of Market
Junior Big Box 20,000 - 40,000 6.59% 31%
Mid Box 40,000 - 80,000 5.75% 52%
Large Format Over 80,000 6.70% 17%
Years Investment Non-Investment
Remaining Grade Grade
16-20 5.00% 5.75%
11-15 5.20% 6.39%
6-10 6.00% 7.00%
5 & Under 7.25% 7.88%
WEST
MOUNTAIN
MIDWEST
SOUTH
NORTHEAST
NORTHEAST
SOUTH
MIDWEST
MOUNTAIN
WEST
5.75%
6.75%
6.00%
7.00%
5.50%

3. www.bouldergroup.com
Q4 2015
THE NET LEASE
BIG BOX REPORT
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
Zach Wright | Research Analyst
zach@bouldergroup.com
© 2016. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the information
and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose nor under any
circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly disclaims any liability
arising from the use of such information. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced, retransmitted or distributed without the express
written consent of The Boulder Group.
Scott Harris | Analyst
scott@bouldergroup.com
CONTRIBUTORS
Sale Date Tenant City State Price Price/SF Cap Rate Lease Term Remaining
Sep-15 Lifetime Fitness Las Vegas NV $51,000,000 $355 5.80% 20
Jun-15 Home Depot Tacoma WA $32,655,000 $238 6.10% 11
Oct-15 Kohl's Lakewood CO $18,705,000 $211 5.95% 10
Sep-15 LA Fitness Powell OH $16,936,000 $502 6.91% 12
Nov-15 Walmart Neighborhood Market Anderson SC $13,900,000 $336 5.15% 20
Aug-15 West Marine Chicago IL $12,622,000 $631 6.90% 15
Nov-15 Walmart Neighborhood Market West Monroe LA $11,957,000 $289 5.10% 20
Jun-15 Walmart Neighborhood Market Katy TX $11,089,000 $265 5.05% 20
Jul-15 Lowe's Chilicothe OH $11,000,000 $84 7.47% 5
Sep-15 Sprouts Farmers Market Pearland TX $9,175,000 $372 5.70% 15
Sep-15 Kohl's Grand Island NE $7,725,000 $112 6.25% 11
Jul-15 PetSmart Bowie MD $6,400,000 $245 6.50% 6
SELECTED SINGLE TENANT BIG BOX CLOSED TRANSACTIONS IN 2015
COMPANY COMPARISON
Total Number Credit
Tenant of Stores Rating
24 Hour Fitness 400+ B
Academy Sports 200+ Not Rated
Bed Bath & Beyond 1,500+ BBB+
Best Buy 1,055 BB+
BJ's Wholesale 210 B-
Dick's Sporting Goods 610 Not Rated
Gander Mountain 152 Not Rated
Hobby Lobby 600 Not Rated
Kmart 942 CCC+
Kohl's 1,165 BBB
Kroger 2,774 BBB
La Fitness 800+ Not Rated
Lowe's 1,840 A-
Petco 1,300 B
PetSmart 1,352 B+
Ross 1,254 A-
Shopko 357 Not Rated
Sports Authority 460+ Not Rated
Staples 2,000+ BBB-
The Home Depot 2,248 A
Wal-Mart 11,598 AA
Whole Foods 431 BBB-