Net Lease N Illinois

New report: Consumers still spending plenty of time at Dollar Stores


Consumers love their dollar stores. That’s why construction crews are building so many of them.

That’s one of the key takeaways from the second quarter Net Lease Dollar Store Report released yesterday by The Boulder Group.

According to the report, the number of single-tenant dollar stores across the country increased by a significant 34 percent in the second quarter of the year when compared to the same quarter in 2016. The Boulder Group said that the majority of this new supply came as new-construction properties.

In the second quarter of 2017, properties built in the last 12 months made up more than 57 percent of the supply of net lease dollar stores.

Cap rates in this sector are on the rise, too. The Boulder Group reported that cap rates in the single-tenant net lease dollar store sector rose to 6.75 percent in the second quarter. That’s up 10 basis points when compared to the same quarter one year earlier.

Not all big players in this sector saw their cap rates rise by the same amount, of course. Cap rates for Dollar Tree assets actually fell by 10 basis points, while those for Dollar General rose 15 basis points and those for Family Dollar increased 20.

Those three retailers do make up the vast majority of the dollar store market. The Boulder Group said that Dollar General accounts for 70 percent of the dollar store market today, while Family Dollar accounted for 24 percent and Dollar Tree 6 percent.

In the Midwest, median cap rates for Dollar General stores stood at 6.85 percent in the second quarter. For Family Dollar stores, that cap rate was 7.25 percent, while it was 7 percent for Dollar Tree.

Dollar stores continue to be profitable businesses. The Boulder Group reported that Dollar General has 13,601 stores across the country and generates $22.3 billion of revenue each year. Dollar Tree operates fewer stores, 6,444, but still generates $20.9 billion in revenue annually.