And most investors expect cap rates to rise in 2017. In a recent national survey conducted by Boulder, the largest segment of net lease participants expects cap rates to increase between 25 and 49 bps by the end of next year.

CHICAGO—Cap rates in the fourth quarter of 2016 for the single tenant net lease sector increased or remained the same for all three asset classes, according to an end of the year report from the Boulder Group, a net lease firm in suburban Chicago. It's a sign that these rates have finally hit bottom after a historic slide that has lasted several years and will finally move up significantly in 2017.

“That's the likely path forward,” Randy Blankstein, president of Boulder, tells GlobeSt.com. The main contributor to the recent rate increases, and the boosts expected over the next year, is that interest rates have finally started to rise. During the fourth quarter, the 10 Year Treasury yield increased significantly to 2.45; up from 1.62 at the start of the quarter, and net lease participants have carefully monitored the effect of these rising rates on net lease valuations.

Retail cap rates increased 9 bps to 6.19% during the fourth quarter, the largest increase for this sector since the second quarter of 2011. Cap rates for the office sector remained unchanged at 7.08% while the industrial sector increased by 3 bps to 7.17%.

Although Blankstein expects investor demand for these net lease properties to remain strong throughout most of 2017, in the short-term rate spikes will cause some in the sector to temporarily hit the pause button. But other factors, including the large amount of CMBS debt that will mature over the year, will push more money into the net lease market.

And most investors expect cap rates to rise in 2017. In a recent national survey conducted by Boulder, the largest segment of net lease participants expects cap rates to increase between 25 and 49 bps by the end of next year.