The commercial real estate development landscape has shifted significantly over the past 18 months, with traditional institutional capital stepping back while private money fills the void. This change is particularly evident in the single-tenant net lease development sector, where smaller, more nimble developers are finding opportunities that larger firms cannot justify pursuing.
Brittany Megrath, Managing Broker, Principal, and Founder of M Square Commercial, has witnessed this evolution firsthand through her Las Vegas-based firm’s national site selection work. Her company specializes in tenant-driven assignments across 15 states and 60 markets, helping developers secure locations for QSRs, car washes, and oil change facilities.
“Some of the deals that are moving right now on the triple net market are the smaller deals, deals that people can buy with all cash,” Megrath explains. “It’s almost like a mom and pop developer that would get those deals done, because big development companies are going to require a larger return because they’ve got so much overhead.”
From Ballet to Commercial Real Estate
Megrath’s path to commercial real estate was unconventional. Starting as a ballet dancer performing two shows nightly in Las Vegas’s Jubilee show, she initially worked commercial real estate as a side job, handling leasing for local shopping centers. When the show closed, she transitioned full-time into real estate, eventually becoming a real estate manager with fitness franchise True Fusion.
Her corporate role at True Fusion proved pivotal in shaping her understanding of national real estate operations. Working with Dallas-based Morrow Hill, a brokerage specializing in representing franchisees nationwide, Megrath learned that real estate expertise could transcend geographic boundaries.
“Working with them, I really learned that you can do real estate in other markets. You don’t necessarily need to specialize in one area, but if you’ve got a particular niche, you can really take that to different places, different cities, and everyone speaks the same language,” she notes.
The COVID period became a catalyst for entrepreneurship. Megrath launched M Square Commercial and quickly expanded beyond Las Vegas, working in several cities. A chance encounter at a women’s real estate investment summit led to her first major developer relationship with ModWash car washes, establishing the foundation for her current specialization.
The Capital Crunch Reality
Today’s development environment presents unique challenges, with land prices emerging as the primary obstacle to deal completion. Megrath identifies this as the most significant hurdle facing developers across all markets.
“The price of land is the biggest negotiable item within a developer’s budget. Where you start yourself off with that land price really impacts the entire deal moving forward,” she explains. “Right now, a lot of sellers, whether on market or off market, really have a high price point that they need in order to get a deal done.”
This pricing pressure is compounded by capital availability issues. While institutional lenders have largely retreated due to internal constraints and risk sensitivity, private money has stepped in to fill the gap, albeit at higher costs.
“There’s a lot of private money that is playing right now over the institutional,” Megrath observes. “People that are playing right now have maybe hard money relationships or personal relationships with capital. They’re taking on risk at a higher cost, but institutional lenders have so much red tape and sensitivity that we’re not seeing them jump in.”
Adapting Tenant Strategies
The challenging economics have forced tenants to reconsider their real estate strategies. Megrath has observed a notable shift from freestanding locations to multi-tenant buildings, driven by cost considerations.
“We’ve seen a couple tenants that when they started were freestanding, and now they’re turning to multi-tenant buildings. There’s lower rent there. They don’t need to do as much volume to cover that rent threshold,” she explains.
While multi-tenant developments present additional complexity for developers who must secure multiple tenant commitments, they offer significant cost advantages. A build-to-suit QSR location can exceed $200,000 annually in rent, while an end cap unit in a multi-tenant building provides substantial savings while maintaining essential features like drive-through access.
Technology as a Competitive Edge
As a boutique firm competing against larger organizations, M Square Commercial has adopted technology to level the playing field. Megrath’s tech stack includes several innovative platforms designed to enhance efficiency and service quality.
“We are really trying to stay ahead to ensure that we’re competing with some of the larger firms out there. Tech is a big piece,” she emphasizes.
The firm utilizes GenSpark, a multi-agent AI platform for marketing presentations, and Monday.com for project management with AI-powered automation features. For off-market opportunities, they rely on Reonomy for seller and contact information. Megrath is also exploring emerging platforms like MapZot.ai and Sytes, which connect tenants and developers on a national scale.
Market Outlook and Interest Rate Implications
Recent industry conferences have provided cautiously optimistic projections for the coming year. At ICSC Florida, discussions centered around potential interest rate reductions of approximately 75 basis points over the next 12 months.
“If that does come to fruition, I think you’re going to start to see another uptick in volume with transactions,” Megrath predicts. However, she acknowledges that land pricing remains the fundamental challenge that rate reductions alone cannot solve.
The current environment requires careful navigation of extended timelines and complex stakeholder relationships. Unlike residential transactions, development contracts can extend over a year depending on municipal requirements, demanding clear communication and realistic expectations from all parties.
“I’m a big believer that when we initially start negotiations, the buyer’s on one side, the seller’s on the other side, but at the end of the day, when we execute that contract, we are really coming together for the end goal,” Megrath explains. “It is a partnership, and I think it’s beneficial for everyone to see it like that.”
The Relationship-Driven Future
Looking ahead, Megrath emphasizes the enduring importance of relationship building in an industry increasingly defined by technological innovation. Her firm’s growth strategy centers on developing long-term partnerships that can adapt to changing market conditions.
“This is a relationship game, so everyone that we meet, I’m really trying to build long-term roadmaps for. It’s not just today, it’s not just the deals that we’ve got under contract, but it’s continuing to grow with these guys and help them expand where they need to,” she notes.
This approach reflects a broader industry reality where success depends not just on individual transactions but on sustained partnerships that can weather market volatility. As institutional capital remains cautious and development costs continue rising, the ability to maintain flexible, trust-based relationships becomes increasingly valuable.
For developers and investors navigating today’s challenging environment, Megrath’s experience illustrates both the obstacles and opportunities present in the current market. While larger institutional players may be sidelined, smaller developers with access to private capital and the flexibility to pursue appropriately sized deals are finding ways to move forward.
The key lies in understanding that today’s market rewards adaptability, strong relationships, and creative problem-solving over traditional approaches that may no longer fit current economic realities.
