Cap rates in the net leased retail sector fell 25 basis points to 7.25% in the fourth quarter from 7.50% in the third quarter. Net leased retail properties saw a premium of more than 75 basis points over both office and industrial net lease properties, the group's Research Department data showed.

Cap rates for net leased office properties rose slightly last quarter while net leased industrial properties declined slightly. Office cap rates rose 4 basis points to 8.04% from 8.00% while industrial cap rates decreased 5 basis points to 8.15% from 8.20%.

The Boulder report also took a look at the supply issues facing the market.

In the fourth quarter, there was a 14.4% decline in overall supply of net lease assets as new construction was limited and there was a marked lack of existing supply.

The number of properties in the fourth quarter to hit the market in the retail sector fell by 12.53% to 2,848 from 3,256; the office sector declined 18.39% to 324 from 397; and the industrial arena decreased 27.09% to 261 from 358.

As a result, the Boulder report showed that the median asking versus closed cap rate spread for net leased retail properties continued to decline, falling seven basis points in the fourth quarter to 10 from 17. The office sector's spread remained unchanged at 50 while the industrial spread rose 13 basis points to 71 from 58 in the third quarter.

Looking ahead, Boulder said the national single tenant net lease market should remain active in 2013 because of the availability of financing.

According to a national survey done by Boulder, the majority of active net lease participants expect transaction volume this year to rise between 5% and 14% from 2012. Core assets with investment-grade tenants will remain in the highest demand, keeping cap rates low for these assets, Boulder said.

However, with the limited supply of long-term leased properties, investors will seek assets with shorter-term leases to achieve higher yields, mostly in top tier markets. Cap rates are seen remaining near current levels in 2013 as buyer demand remains high and new development remains limited, according to the Boulder report.

Instant Insights /

Report: U.S. Net Lease Cap Rates Remain Near Historic Lows in Q4

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