Here's one a reason why car wash properties, along with certain gas stations and convenience stores, saw the highest cap rate spikes in Q1. Their 80% bonus depreciation rate is available in the first year of purchase making them attractive to investors that were already interested in the single tenant net lease asset class.

Those sectors were part of a steady rise in cap rates across the board, according to a new report by B+E. Car-wash cap rates rose by 49 basis points between the fourth quarter of 2022 and the first quarter of 2023 to sit at an average 5.77% cap rate.

"The price shift is likely due to a dramatic increase in on-market inventory, as more than one new car wash property has been listed each day in 2023," according to the report.

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