CHICAGO—Cap rates for single tenant net leased banks have sunkto their lowest level in years, according to a study recently released by theBoulder Group, a commercial real estate servicesfirm located in suburban Chicago. Last month, GlobeSt.com reportedthat cap rates for drug stores like Walgreens had also hit historiclows, but the data show that investors find banks themost appealing, and over the last four years the gap in cap ratesbetween banks and other retail has widened to about 200 bps. Priorto the recession, that gap was usually about 50 bps.

“Banks typically the only net lease investments that offerleases of over 15 years, investment-grade tenants and includebuilt-in rental escalations,” Randy Blankstein,president of Boulder, tells GlobeSt.com. “A lot of people worryabout inflation down the track and rental escalations alleviatethat concern.”

Boulder included ground leases from national and regional banksin the study, and found that 95% had an investment-grade rating.Overall cap rates sank from 5.0% one year ago to 4.75% in thisyear's first quarter. Rates for PNC fell from5.25% to 4.5% and those for TD Bank fell from 5.0%to 4.35%. And “bank ground leases with twenty or more years oflease term remaining experienced the greatest compression of 52 bpsin the past twelve months,” according to Boulder's new report.