Cap rates in the single-tenant net lease sector rose slightly in the second quarter after hitting historically low levels in the previous quarter, according to the 2nd Quarter Net Lease Research Report from Boulder Group.

Industrial cap rates increased by 18 basis points to 6.89%. Single-tenant retail cap rates increased by 11 basis points to 6.02%, while office cap rates remained unchanged in the second quarter. The number of properties on the market decreased 3.94% for retail and 2.43% for office compared to Q1 2021. It rose 6.36% for industrial. The median national asking versus closed cap rate spread declined 4% for industrial and 2% for retail. It rose 4% for office.

Randy Blankstein, President of The Boulder Group, attributed the cap rate increase to the increased concentration of lower-quality assets. Overall, there was a 3% decrease in the supply of net lease assets. However, assets with short-term leases and less desirable tenant credits made up a more significant concentration of the market in the second quarter.