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Single-tenant net lease cap rates increased for the third consecutive quarter in Q4 of 2022, The Boulder Group reported

Net Lease Cap Rates Widen for the Third Consecutive Quarter

Cap rates in the single-tenant net lease sector increased for the third consecutive quarter within all three sectors in the fourth quarter of 2022, according to The Boulder Group’s 4th Quarter Net Lease Research Report. Single-tenant cap rates increased to 5.95% (up nine basis points) for retail, 6.95%  (up 15 bps) for office and 6.65% (up four bps) for industrial. 

“Continued upward pressure mounts on cap rates for net leased properties” said Randy Blankstein, president, The Boulder Group. “Borrowing costs for both private and institutional investors continued to rise over the course of 2022. For reference, the 10-year Treasury yield ended 2022 at 3.87% after beginning the year at 1.53%.” 

Following historically low cap rate levels for all three assets classes in Q1 2022, the retail and office sectors experienced a significant rise throughout 2022. Single-tenant retail cap rates rose by 20 bps, while office cap rates expanded by 25 bps. Industrial cap rates widened to a lesser extent over the course of 2022, rising just five bps. 

“The primary reason for increasing cap rates is related to borrowing costs which impacted pricing in all real estate sectors,” added Jimmy Goodman, partner, The Boulder Group. 


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 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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