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Net Lease Cap Rates Reach Record Lows


Net lease market cap rates remained at or near historic lows in every major sector in Q4, according to the latest report by The Boulder Group. Office cap rates across the country dropped 25 bps from 7.25% to 7%. Industrial caps dropped from 7.59% to 7.44%, a decrease of 15 bps. Single-tenant retail held steady at 6.25%.

Overall supply of net-leased assets decreased 11% between Q3 and Q4, with retail assets seeing the sharpest drop at 12.5%. Investor demand in single-tenant retail remained strong, despite the decline in cap rates over 2015.

The Boulder Group predicts the net least market will remain active in the early part of 2016, with limited movement in valuations moving forward.