So-called “junior boxes” actually make up the largest portion of overall net-leased big-box stores on the market, according to The Boulder Group’s fourth-quarter U.S. net-lease big-box report. Junior boxes are those in the 20,000-40,000-square-foot range. Big boxes are typically larger than 80,000 square feet.
“Despite the perception that the big box sector is solely large format big box stores including Walmart, Target and Home Depot, junior big box tenants like Hobby Lobby, Goodwill and PetSmart made up the majority of the supply in the fourth quarter of 2016,” writes the firm’s vice president John Feeney. Junior big box accounted for 50% of the supply while mid box and large format made up 37% and 13% respectively, he says.
In the fourth quarter of 2016, approximately 25% of the big box supply was leased to investment grade tenants, according to the report. The cap spread between investment grade and non-investment grade tenants compressed in the fourth quarter of 2016 to 15 basis points. In the fourth quarter of 2015, this spread was 155 basis points, again, due to the concentration of Walmart Neighborhood Market properties at the time.
