National + Net Lease | January 3, 2022

Net Lease Cap Rates Tick Upward in Q4

Single-tenant net lease cap rates rose slightly in the fourth quarter of 2021; following historic lows in Q3, the Boulder Group reported. Retail and industrial cap rates increased slightly to 5.88% and 6.77%, respectively, while those for office remained unchanged at 6.80%.

“Low interest rates and substantial amounts of investment capital chasing stable yields created an active net lease market throughout 2021,” said Randy Blankstein, president, The Boulder Group. “Net lease transaction volume in 2021 exceeded $90 billion, a new record.”

A limited supply of net lease properties with attributes that command low cap rates was the main contributing factor for the change. However overall, property supply increased by more than 10% in Q4.

“As a result of the low cap rate environment and high demand for net lease properties, net lease owners added lesser quality properties to the market to take advantage of attractive pricing,” added partner Jimmy Goodman.

Connect

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 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).

Order Reprints