CHICAGO-National cap rates increased in the second quarter, a dynamic not seen since a year ago, according to a second quarter net lease market report by the locally-based Boulder Group. However, the company says any movement is mostly just in the primary markets, with secondary and lesser markets still struggling to see activity.

Randy Blankstein, president of the company, said the increase of investor demand returning to the single-tenant market can be attributed to continued improvement in the financing market as banks, credit unions and life companies have become more active after a dismal 2009. “The story is pretty simple, with financing coming back, cap rates are coming down,” he tells GlobeSt.com.

However, he says the majority of activity in the market has been reduced to two segments. One market segment of investors is focused on sub-8% cap rate properties under $10 million that are leased to investment-grade rated tenants in core metropolitan areas, with long-term leases. The other segment is comprised of yield buyers, at 9% cap rates and higher, who are seeking opportunistic return strategies by targeting second-tier markets, non-investment grade tenants or shorter-term leases. “It’s a bifurcated market at this point,” Blankstein says.