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Cap Rates Continue Expanding in Q2 for Single-Tenant Retail, Industrial

Net lease cap rates have risen again in the second quarter of 2024, with average caps increasing by 12 basis points quarter-over-quarter to 6.27%, B+E reported. Also up are the average times on the sale market, which increased by 0.8 months during Q2.

B+E’s Q2 cap rate report found that retail cap rates have risen by an average of 12 bps, with some sectors such as casual dining and dollar stores increasing by 21bps from Q1. However, cap rates for quality tenants such as McDonald’s remain relatively stable. Industrial cap rates increased by an average of 15 bps, with FedEx properties rising 39 bps to an average of 6.87%.

“The rise of the 10-year U.S. Treasury continues to put upward pressure on cap rates as investors face higher borrowing costs,” according to the report. “The [Federal Reserve] continues to cite inflation, better-than-expected economic growth and a tight labor market as factors leaving rates unchanged.”

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

  • ◦Sale/Acquisition