Net Lease Cap Rates Reach Historic Lows


Excerpt of article originally published by GlobeSt

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.”

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