In the first quarter of 2024, cap rates for single-tenant net lease properties saw an increase for the eighth consecutive quarter across all three major sectors, according to a report by The Boulder Group. Retail properties experienced a rise of seven basis points to 6.42%, while office and industrial properties also saw increases at 7.60% (up five bps) and 7.02% (up two bps), respectively.
President Randy Blankstein stated that these cap rate levels were the highest seen since 2014 in the retail sector, but still remain lower than their historical average by approximately forty basis points in both retail and industrial categories.
Partner Jimmy Goodman added that elevated interest rates have resulted in lower transaction volume compared to previous years, with fewer buyers participating in exchange activities leading to an increased supply of net lease properties on the market.
The supply of single-tenant properties rose by over nine percent from Q4 2023 levels as limited transactions occurred during this time period causing more listings on the market. Despite these challenges faced within the market, certain sellers such as merchant builders or owners with upcoming loan maturities are looking to meet current pricing trends according to The Boulder Group’s findings.
