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National  + Net Lease  | 
New-construction stores leased by Dllar General and other brands saw the greatest cap rate compression in Q1 2022

Net Lease Cap Rates Reach Historic Lows 

Cap rates in the single-tenant net lease sector reached historic lows for all three asset classes—retail, office and industrial—in the first quarter of 2022, the Boulder Group reported. Single-tenant cap rates compressed by 13, 10, and 17 basis points in retail, office and industrial, respectively. Cap rate compression continues to be derived from the significant demand for net lease properties across all investor classes. 

“Following record transaction volume in 2021, net lease sales velocity continued in the first quarter of 2022,” said Randy Blankstein, president, The Boulder Group. He added that Q1 transaction volume was up more than 10% from the year-ago period. 

Despite the record transaction volume in 2021, the overall net lease property supply declined by more than 5% in Q1. 

“Supply chain issues and delayed expansion plans for retailers related to COVID-19 limited new construction supply,” said partner Jimmy Goodman. “Only 15% of net lease retail properties on the market were constructed in 2021 or 2022.”

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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 13-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 15-20 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).

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