Corporate Capital Outlook - Q3 2024
This report covers the outlook for the global economy, corporate debt capital markets and European net lease transactions
Written by Colliers Corporate Capital Solutions, the report details the current state of the global economy and how that’s impacting the net lease sector. The report also features contributed content from Christopher Mertlitz, Head of European Investments at W. P. Carey, on what to expect as we enter a new real estate cycle and the outlook for sale-leasebacks.
Download the report:
Related Topics:
You May Also Like:
Net Lease Retail is at an Inflection Point
As retail investors and operators convene in Las Vegas for ICSC, the conversation around net lease retail feels both familiar and different. Familiar, because the net lease retail market continues to demonstrate resilience and stability. Different, because the drivers shaping today’s retail real estate decisions are evolving—creating new opportunities for operators and investors alike. From rising sale-leaseback activity tied to M&A, to more intentional approaches around store size and format, today’s net lease retail market is being shaped by a combination of strategic growth decisions, changing consumer behavior and a more balanced transactional environment. These are several of the key trends taking center stage ahead of the conference. Sale-leasebacks Follow Strategic M&A Activity One of the most consistent drivers of sale-leaseback volume in retail today is merger and acquisition activity. Whether it involves private equity-backed platforms consolidating regional brands or strategic buyers acquiring complementary concepts, transactions often prompt companies to reassess their balance sheets—and real estate frequently emerges as one of the most efficient sources of capital. In many cases, companies come out of acquisitions with real estate portfolios that were not central to the strategic rationale of the deal. Sale-leasebacks allow operators to unlock that capital, streamline their asset base and redeploy proceeds into higher-return priorities such as new stores, technology investments or debt reduction. What stands out in the current environment is that this activity is not limited to highly leveraged situations. Healthy, growing retailers are increasingly using sale-leasebacks proactively as part of longer-term capital planning, particularly when M&A introduces scale or accelerates geographic expansion. Sale-leasebacks continue to provide a compelling alternative to traditional financing for businesses seeking flexibility and predictability. The Evolution Toward Smaller, More Flexible Footprints Another defining trend across retail is the ongoing evolution of physical store footprints. While large-format locations remain relevant in certain categories, many retailers are gravitating toward smaller, more efficient concepts that align with omnichannel strategies and localized demand. These stores are often designed to serve multiple functions—acting as showrooms, service hubs, fulfillment points or a combination of the three. Flexibility has become increasingly important, both in store design and in location strategy, as retailers respond to shifting consumer behavior. From a net lease perspective, this evolution places greater emphasis on unit-level fundamentals. Smaller footprints can generate compelling cash-on-cash returns, but success depends heavily on the alignment between location, concept and the operating model. The underwriting process for net lease retail investors is therefore increasingly focused on how these formats perform across markets, how scalable they are and how they fit into a retailer’s broader growth strategy. Stabilized Cap Rates Bring Predictability Back to the Market After a period of volatility driven by rapid interest-rate movements, cap rates across the net lease retail space have begun to stabilize. While pricing discipline remains essential, the return of predictability has had a meaningful impact on transaction activity. Clearer valuation benchmarks make it easier for buyers and sellers to transact. Investors can underwrite opportunities with greater confidence, tenants can assess capital alternatives more thoughtfully and deals are less likely to stall amid uncertainty around pricing expectations. That said, credit quality, location fundamentals, lease structure and real estate criticality remain core considerations. However, in a more balanced environment, high-quality assets supported by strong operators are finding liquidity, and capital is moving more efficiently. Looking Ahead As ICSC Las Vegas approaches, there is optimism across the net lease retail landscape. While uncertainty remains part of the broader economic backdrop, the conversations in Las Vegas are expected to reflect an industry that has evolved through recent cycles and continues to find opportunity through change. For net lease retail, the current environment represents less of a reset and more of a recalibration—one that rewards sound fundamentals, flexibility and a long-term investment approach.
A Balancing Act Between Deployment and Discipline
Net lease continues to be one of the core investment strategies employed in the global real estate market, but conditions in the US and Europe do not strictly mirror one another, explain Christopher Mertlitz, Head of European investments, and Zachary Pasanen, Co-head of North American Investments. However, across both of these regions, a common thread is emerging amid an uncertain macro environment: investors are balancing pressure to deploy capital with a more cautious approach to pricing, risk and long-term tenant viability. Download W. P. Carey’s keynote interview from the PERE Net Lease Report to learn more about the differences between the US and European net lease markets, which asset classes are garnering the most interest from investors, where deal flow is coming from and more.
An Interview with Gino Sabatini
Gino Sabatini, our Head of Investments, was recently a guest on the Net Lease Observer podcast. In the podcast, Gino discusses: His background in the restaurant business The history of W. P. Carey His view on how the investment market has changed over the years; and His outlook for 2026 and beyond Watch now An interview with Gino Sabatini, W. P. Carey, and Sean Hostert, Net Lease Observer.