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2018
THE NET LEASE MARKET REPORT
Q2 2018 Q3 2018 Basis Point Cap rates for the single tenant net lease retail sector increased
Sector (Previous) (Current) Change
by 5 basis points in the third quarter of 2018. This represented
Retail 6.20% 6.25% +5
the third consecutive quarter of increased cap rates for the single
Office 6.95% 7.00% +5
tenant retail sector. Cap rates increased for the office sector by 5
basis points and compressed by 2 basis points for the industrial
Industrial 7.04% 7.02% -2 sector. The upward trend of cap rates should remain as the Federal
Reserve continues to implement its monetary policy objectives.
While demand for assets in the net lease sector remains strong,
pressure on cap rates comes from upward movement in the 10
NUMBER OF PROPERTIES year treasury yield. In the third quarter, the 10 year treasury yield
ON THE MARKET peaked at 3.10, its second highest level since early 2014. The
rising rate environment has had the greatest effect on cap rates on
Q2 2018 Q3 2018 Percentage
Sector (Previous) (Current) Change properties with no rental escalations, weak credit and properties in
secondary/tertiary markets. Furthermore, assets priced above $12
Retail 4,216 4,347 3.11%
million that typically are sold to institutional buyers experienced
Office 538 504 -6.32% significant cap rate increases. Institutional buyers are more
sensitive to the volatility of financing markets and adjust their
Industrial 388 384 -1.03%
acquisition criteria accordingly.
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Q3
2018
THE NET LEASE MARKET REPORT
8.75%
8.25%
7.75%
7.25%
6.75%
6.25%
5,75%
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018
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Q3
2018
THE NET LEASE MARKET REPORT
AUTHOR CONTRIBUTORS
Randy Blankstein | President Jimmy Goodman | Partner
John Feeney
randy@bouldergroup.com jimmy@bouldergroup.com
Senior Vice President
john@bouldergroup.com Scott Harris | Senior Analyst Jeff Weil | Analyst
scott@bouldergroup.com jeff@bouldergroup.com
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