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Net Lease Cap Rates Continue to Expand

Increased borrowing costs and a decreasing amount of 1031 exchange investors hinder activity.

Cap rates in the single tenant net lease sector increased for the third consecutive quarter in the fourth quarter of 2022, according to new research from The Boulder Group.  Single tenant cap rates increased to 5.95%, an increase of 9 bps, for retail, 6.95% (+15 bps) for office and 6.65% (+4 bps) for industrial in the quarter.

“Continued upward pressure mounts on cap rates for net leased properties,” says Randy Blankstein, President, The Boulder Group. “Borrowing costs for both private and institutional investors continued to rise over the course of 2022. For reference, the 10 Year Treasury Yield ended 2022 at 3.87% after beginning the year at 1.53%.”

Lynn Pollack

 

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