Medical Net Lease Makes Its Bones with Investors

Single-tenant medical net lease is looking very healthy. Cap rates for the subsector, involving properties from $2 million to $8 million, dropped 55 basis points year over year to 5.95% in Q3 of 2021, according to a new report from the Boulder Group. The overall net lease group also saw a cap rate compression, but of 23 basis points.

In other words, a year ago, medical net lease was trading at a 28-basis point discount to the general category. Now it’s at a 4-basis point premium. “It’s outperformed the market by 32 basis points last year, which is fairly significant,” Boulder Group president Randy Blankstein tells GlobeSt.com. “A lot of net lease-investors are over allocated in retail. They want to rebalance, and that’s buy more in medical and in industrial.”