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Net Lease Cap Rates Post Slight Increase in Q3
Cap rates in the net lease sector continued to rise in the third quarter of 2024, albeit slightly, net lease brokerage The Boulder Group reported. The overall rise was three basis points quarter-over-quarter, with the average cap rate coming in at 6.73% in Q3.
All property types saw an uptick in cap rates, according to the Q3 report from The Boulder Group. Office sector net lease properties experienced the largest increase, at eight bps, with industrial up five basis points. Retail edged up three bps in Q3.
The onset of rising cap rates coincided with the Federal Reserve’s series of increases to the federal funds rate. “Additionally, there is a stagnant supply of net lease properties on the market resulting from limited transaction activity from both private and institutional buyers,” said Boulder Group president Randy Blankstein.
Current sellers of net lease properties hope the recent 50-bp cut in the federal funds rate will increase transaction velocity and potentially improve pricing in their favor. However, most market participants remain cautious and don’t expect cap rates to compress near-term unless there are continued rate cuts.
- ◦Sale/Acquisition
