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NORTHBROOK, IL—Sales transactions in the nation’s net lease property market took another hit in the second quarter, making for a 60% decline from the first quarter’s uncharacteristic increase in activity and a 38% decline from the second quarter of 2008.

That’s among the findings of the Q2 Net Lease Market Report from Northbrook, IL-based Boulder Net Lease Funds LLC, released Wednesday afternoon.

Though the bid-ask gap still exists, Boulder reports that seller expectations are being tempered by the tough market environment. As a result, properties newly coming on the market for sale “are being introduced to the market with rational seller expectation on cap rates” but also are generally of a higher quality, which is reflected in more expensive price-per-square-foot values.

At the same time, buyers are still hesitant, and are largely only cherry-picking the strongest assets. “General buyer sentiment continues to be negative due to the looming CMBS default problem,” says the report, authored by Boulder vice president Noah Gottlieb.

“Boulder believes that general market sentiment is quite negative, as all potential buyers presume that the lack of debt combined with a pending supply glut (due to expiring debt obligations) will force further downward pricing adjustments in the third and fourth quarters,” the report concludes.

I’m not waiting for things to change much. This bid-ask spread has not gone away, the debt problem hasn’t corrected,” Boulder president Randy Blankstein tells GlobeSt.com. “I don’t see anything in the next six months that will move this market.”

Other findings from Boulder’s report:

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