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Cap Rates Compress 55 BPs for Net Lease Medical
National asking cap rates in the single-tenant medical sector compressed to 5.95% in the third quarter, according to The Boulder Group’s 2021 Net Lease Medical Report. This represented a 55-basis-point decrease from a year ago.
“An increased investor allocation for medical properties was a primary factor in cap rate compression,” said Randy Blankstein, president, The Boulder Group. “Additionally, strong investor demand put downward pressure on cap rates in the sector.”
Since 2017, net lease medical has been priced at a discount compared to the overall net lease sector. However, Q3 saw net lease medical properties priced at a four-bp premium to the overall net lease sector following a year of significant compression.
Lower price point, net lease medical assets provided an opportunity to investors when compared to net lease retail. In Q3, net lease medical was priced at a 15-bp discount to net lease retail.
“Medical-related tenants continue to expand off hospital campuses and into historically retail real estate locations, implementing so-called ‘medtail’ strategies,” said Jimmy Goodman, partner, The Boulder Group. “Net lease investors that previously focused on retail real estate added this asset class to their acquisition criteria in search of higher yields.”
- ◦Sale/Acquisition
