The net lease market has witnessed an astounding transformation in the last two years. From May 2022 to May 2024, the total supply of net lease available assets has increased from $9.05 billion to $24.3 billion. That represents a 168% jump in inventory in only 24 months despite average cap rates rising 88 basis points during that same period.

Many participants in the net lease market are overlooking the major storm brewing on the horizon. Despite rising cap rates, inventory levels continue to swell, signaling that cap rates will almost certainly climb much higher to restore market equilibrium. Here, we explore the reasons behind this trend, analyze the underlying data and discuss implications for the future so you can stay ahead of the market.

The Cap Rate Pendulum Swings