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Net Lease Cap Rates Post Seventh Consecutive Quarterly Increase

Single-tenant net lease cap rates increased in the fourth quarter of 2023 for the seventh consecutive quarter to 6.58%, a seven-basis point increase compared to Q3, The Boulder Group reported. By sector, the increases were eight bps to 6.35% for retail, 14 bps to 7.55% for office and four bps to 7.00% for industrial.

“Cap rates continued to rise in the fourth quarter as asset pricing has not caught up to the massive increase in borrowing costs over the past year,” said Randy Blankstein, president, The Boulder Group. “A lack of 1031 buyers is also causing property supply to increase in a meaningful way.”

The disparity in the spread between the median asking and closed cap rate increased across all asset types from the previous quarter. This was especially apparent in the office sector, where the cap rate spread increased by 12 bps in Q4 to 67 bps. Simultaneously, the number of properties on the market in Q4 grew by 11.6% overall and by 12.7% for the retail sector when compared to Q3.


Inside The Story

Boulder Group

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 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
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