Net Lease Cap Rates Reach Historic Lows
Lanie Beck, Director of Corporate Research, Marketing & Communications, Stan Johnson Company, tells GlobeSt that its preliminary data for Q3 2021 indicates healthy investor activity over the summer for the single-tenant net lease market.
Projections put total investment volume for the sector between $14.8 and $16.5 billion for the quarter, which would fall just shy of the quarterly five-year average and look like a near repeat of Q1 2021.
Overall average cap rates for net lease assets are likely to compress by a few basis points as they approach the 6 percent-mark, putting the average at an all-time low.
“For pricing, the most notable trend we’re watching is within the net lease industrial sector, where cap rates have been in the high-5 percent range for six consecutive quarters now,” Beck said.
“Demand for newly built, high-quality distribution properties continues to be incredibly robust as both institutional and private buyers seek out these assets, and the cap rate compression we’re seeing is a direct result.
“But supply across all asset classes remains a challenge for investors. The appetite for net-lease investments is growing, and I have no doubt that we’d be seeing higher levels of investment volume if only the supply existed.”