CHICAGO—After a record-breaking year in 2015, 2016 saw net lease investments fell back toward the historical averages, especially in the industrial and retail sectors, according to a recent report published by JLL. The Chicago-based firm's research showed $45.6 billion in net lease sales during the past year, a big drop from the previous year, when sales approached $60 billion.

Sales in the net lease office sector did increase by 7.4% year-over-year due to eleven mega deals, accounting for 24.5% of the year's total sales. But overall sales in the industrial sector were $13.4 billion, a 32.7% drop from 2015, which JLL attributes to a lack of big portfolio sales. And in the retail sector, which also had a limited number of large deals, net lease investors spent $10.2 billion in 2016, a decline of 34.6%.

Big portfolio sales may return in 2017. As reported today in GlobeSt.com, private equity real estate firm DRA Advisors just bulked up its holdings by acquiring a 184-property portfolio from Cabot Properties Inc. The $1.07-billion buy expands DRA's industrial footprint by 19.8 million square feet. Although the mega-portfolio sales of 2015 contained many giant distribution buildings, the average size of buildings in the Cabot portfolio is less than 108,000 square feet, perhaps a sign that investors have shifted their focus.

Cap rates in the office sector fell to 6.5%, JLL found, a total compression of 24 bps since 2015. The drop was driven by intense competition for properties in primary markets, which saw rates decline 71 bps. The other sectors were steadier. Rates for industrial properties were largely unchanged at 6.6%. And in retail, “the first half of the year drove an overall pricing compression of 12 bps since the year prior, while yields in the third and fourth quarter increasingly softened. With increases in US treasury rates influencing the re-pricing of transactions, further softening is anticipated through 2017.”