For the first time in the last two years, cap rates increased for the single tenant net lease sector for two consecutive quarters, according to new data from The Boulder Group.

The increases were observed across all three asset classes in Q3, with single tenant cap rates rising to 5.86% (+6 bps) for retail, 6.80% (+3 bps) for office and 6.61% (+1 bps) for industrial. At the same time, the supply of net lease properties went down by more than 12% over the prior quarter.

“Buyers and sellers have yet to agree on pricing levels given the current environment and a period of price discovery continues,” the report notes. “The spread between asking cap rates and confirmed sale cap rates increased slightly in the third quarter, but not in a meaningful amount. Accordingly, sale transactions in the third quarter of 2022 were more than 30% lower than in the third quarter of 2021. The expectation from market participants is that the bid ask spread will widen as price discovery plays out in the fourth quarter and into 2023.”

The pricing analysis reflects similar research from JLL recently, which observed real-time pricing discovery” underway leading into the second half of the year.

“Investors are ‘stress-testing’ based on future rate increases and the potential for a recession,” the JLL report noted. Debt markets are also volatile and posting upward pricing pressure across assets.

Net lease buyers also changed their acquisition criteria as rates rose and inflation heated up over the quarter, according to The Boulder Group, with properties with rent growth or the ability to increase rents in the near term in highest demand. Meanwhile, demand for properties with limited or no rental escalations are limited to properties with above market yields or strong underlying real estate.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Lynn Pollack


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.