Net Lease Cap Rates Stay at Historic Low

CHICAGO—Investors continued to pour money into the net lease market during the second quarter and this kept cap rates in each of the major sectors at or near historic lows, according to a new study by the Boulder Group, a commercial real estate firm in suburban Chicago. But after steadily sinking for several years, the cap rates for these properties do seem to have leveled off.

The average rate in the single tenant net lease retail sector remained unchanged at its historic low of 6.4%. And rates for the office and industrial sectors did move downward, but only slightly. Office rates sank to 7.3% in the second quarter, down just 5 bps since the first, and the average cap rates for industrial properties sank to 7.62%, a decline of 8 bps.