Marcus & Millichap

Net-Leased Retail Research Report

National Report, Summer 2019

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Thriving Single-Tenant Sector Offers Stability and Yield Alternatives; Tax Clarification Prompts Investors to Use Long-Term Vision

Investment blueprints modeled around new tax provision. Recent clarification on the 20 percent pass-through deduction that was introduced with the Tax Cuts and Jobs Act is impacting investment strategies. While the low maintenance needs of single-tenant retail assets has long been a benefit, the pass-through deduction requires active management so these properties may not qualify for this provision. Some investors are taking a shorter-term decision-making approach to this, opting for different property types if their current business practices don’t meet the new criteria. Conversely, others continue to favor the long-term stability of single-tenant retail. Taking a big-picture approach will be crucial for investors as they re-evaluate strategies and analyze potential outcomes.

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