Foreign investors increase holdings in net-lease acquisitions

First quarter 2019 net-lease acquisitions volume fell by 3.6 percent year-over-year to $12.5 billion, according to a CBRE report.

Rising demand for U.S. net-lease real estate led to $68.3 billion in investment volume in 2018 — the highest annual total since CBRE began tracking the market in 2002. Volume in 2019 is expected to remain elevated, with increasing investor demand for net-lease office and industrial assets.

Investors are increasingly focused on net-lease investment opportunities in high-growth secondary and tertiary markets. While gateway markets such as New York City, Washington, D.C., and Chicago had the largest gains in investment volume from 2017 to 2018, markets such as Phoenix, Seattle, Baltimore, Columbus and Atlanta made the top-10 growth list.

Overall net-lease cap rates were stable in 2018. Spreads over Treasuries have been gradually tightening since 2012 and narrowed to 321 basis points (bps) last year with rising interest rates. Recent de