CHICAGO—Cap rates for the single tenant net lease properties slid down in the third quarter, continuing a long-term decline that has now lasted nearly five years. As more investors entered the competition for properties, the retail and office sectors reached new historic lows of 6.25% and 7.25% respectively, and the industrial rate fell slightly to 7.59%, according to a new report from the Boulder Group, a net lease investment brokerage firm located in suburban Chicago.

“The net lease sector as a whole is becoming more popular,” Randy Blankstein, president of Boulder, tells GlobeSt.com. He attributes much of this popularity to demographics. A lot of people are on the verge of retirement and have started looking for investments which promise higher yields than bonds, and net lease retail properties are especially well-suited for this group.

The office and industrial properties tend to be too large and pricey, generally more than $10 million, making them more suitable for institutional investors, Blankstein adds. Furthermore, net lease retail properties are usually well-known brands such as McDonald's or Dunkin' Donuts, and that provides a lot of comfort to smaller private and 1031 investors. Cap rates for net lease retail properties declined by 15 bps in the third quarter, the largest decline since the second quarter of 2014.