Investment activity in the U.S. single-tenant net lease market is falling sharply. In the three months through June 2025, sales volume dropped to $9.61 billion — one of the lowest quarterly totals in more than a decade. The figure marks a 13.1 percent decline from the first quarter and a 4.6 percent drop from a year earlier, according to Northmarq. At midyear, total sales stood at $20.66 billion, putting the market on track for its weakest annual result since before the pandemic, unless activity rebounds in the months ahead.
To Lanie Beck, Northmarq’s senior director of Content & Marketing Research, one of the most notable developments amid the slowdown is that pricing metrics appear to be leveling off. She noted to GlobeSt that cap rates “are starting to see stabilization across the single-tenant market,” with retail showing only a two-basis-point increase from the first to the second quarter. That moderation, she said, contrasts with the much steeper jumps seen 18 months ago, suggesting the market is “getting comfortable doing deals again.”
That comfort is being helped by more consistent financing availability and a narrowing gap between what buyers are willing to pay and what sellers expect. Higher-quality assets are trading, while riskier properties are no longer experiencing outsized cap rate spikes. Beck expects this alignment to set the stage for “a stronger second half” of the year, with more transactions and relatively steady cap rates that may fluctuate by only a basis point in either direction.
Even so, the breadth of the market’s pullback is unmistakable. Industrial assets — still the largest segment by quarterly sales volume — totaled $5.44 billion in the period, down from $5.70 billion in the first quarter. Office sales continued a multi-quarter retreat, slipping to $1.92 billion. Retail was the only sector to post a year-over-year increase, up 5.7 percent from Q2 2024, yet its sales volume fell sharply from $3.28 billion in the first quarter to $2.24 billion in the second.
The composition of buyers has also shifted. Private investors led the market in the first half with 43 percent of purchases. Institutional investors accounted for a larger share of the market than in recent years, rising to 25 percent, while public REIT activity sank to just seven percent of transactions. International buyers, making up 5 percent of all purchases, were largely absent outside of select retail deals. “A lot of international buyers are sitting on the sidelines wondering, ‘Is the U.S. the right place to invest right now?’" Beck said, adding that institutional capital has been able to claim a bigger slice of the market as a result. She expects private buyers to remain dominant in the single-tenant segment, maintaining a majority share of transactions.
Industrial’s long-standing leadership in sales activity has remained intact, while retail investment volume has fluctuated from quarter to quarter over the past two years. Beck sees strength in well-located, Class A retail properties with low vacancy rates, which continue to attract expanding tenants quickly after space is vacated.
In the separate multi-tenant market, Beck said activity is holding steady and could match 2023 levels, even if it falls short of the 2021 peak. Private buyers remain the most active participants, representing nearly 60 percent of the buyer pool. Industrial properties again lead in sales, but interest in multi-tenant retail assets — especially shopping centers — remains high. Cap rates in that segment have moved within only a seven-basis-point range over the last five quarters, underscoring its stability.
Longer term, Beck is watching the impact of retail property conversions, from mall redevelopments to reuses of large anchor spaces for housing, hospitality, or mixed-use projects. As these properties are repurposed, total retail inventory will shrink, potentially spurring demand for new construction — something that has been relatively slow in recent years.
As 2025 moves into its second half, the net lease landscape is defined by fewer sales, evolving buyer dynamics, and early signs of pricing stabilization. For many market participants, Beck’s view of a stronger finish will hinge on whether investor confidence — and the recent alignment between buyers and sellers — can hold.
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