Cap rates in the single-tenant net lease sector increased for the 12th consecutive quarter in the first quarter of 2025, The Boulder Group said in its 1st Quarter Net Lease Research Report. Overall cap rates rose to 6.78%, a two-basis-point increase from Q4 2024. Single tenant cap rates increased to 6.56% (+4 bps) for retail, 7.80% (+2 bps) for office and 7.23% (unchanged) for industrial.
“The persistent upward trend in net lease cap rates now spans three years,” said Randy Blankstein, president, The Boulder Group. “This is reflective of sustained high borrowing costs and inflationary pressures.”
Property supply in the single-tenant sector increased by more than 5% from the previous quarter. Over the past two years, supply has grown by nearly 30%, due to lessened transaction velocity and a pricing gap between buyers and sellers.
“Of all the net lease sub-sectors, the drugstore sector is experiencing the slowest transaction volume and a glut of supply,” added Jimmy Goodman, partner, The Boulder Group.
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