In the second quarter of 2024, net lease cap rates have once again experienced an increase, as reported by B+E. The average caps rose by 12 basis points from the previous quarter to reach a rate of 6.27%. Additionally, there has been a rise in the average time properties spend on the market for sale, with an increase of 0.8 months during Q2.
B+E’s Q2 report on cap rates reveals that retail properties have seen an average increase of 12 bps in their cap rates. Sectors such as casual dining and dollar stores have experienced even higher increases at a rate of 21bps since Q1. However, quality tenants like McDonald’s have maintained relatively stable cap rates. Industrial properties also saw an overall rise in their cap rates with an average increase of15 bps; specifically FedEx properties increased by39 bps to reachanaverageof6 .87%.
According to B+E’s report,”The continuous growthofthe10-year U.S.Treasury is putting upward pressureoncapratesas investors face higher borrowing costs.” The Federal Reserve attributes this trendto inflation,a strong economy,and low unemployment levels when explaining why they are keeping interestratesunchanged.
The article “Cap Rates Continue ExpandinginQ2forSingle-TenantRetailandIndustrial” was originally publishedby Connect CRE.
