In the fourth quarter of 2023, single-tenant net lease cap rates saw a rise for the seventh consecutive quarter, reaching 6.58%. This marks a seven-basis point increase from Q3 and was reported by The Boulder Group. Across sectors, retail saw an eight bps increase to 6.35%, office had a 14 bps increase to 7.55%, and industrial experienced a four bps rise to reach 7%.
According to Randy Blankstein, president of The Boulder Group, this continued upward trend in cap rates can be attributed to asset pricing not keeping up with the significant rise in borrowing costs over the past year. Additionally, there is also an increasing supply of properties due to fewer buyers utilizing tax-deferred exchanges (1031s).
The gap between median asking and closed cap rates widened across all asset types compared with the previous quarter. This was most notable in the office sector where there was a spread increase of twelve basis points (bps) in Q4 resulting in a total spread of sixty-seven bps.
During this same period (Q4), overall property listings increased by eleven-point-six percent while retail listings specifically grew by twelve-point-seven percent when compared with Q3 numbers.
This article originally appeared on Connect CRE.
