Net-lease cap rates reach new all-time low

In the fourth quarter, cap rates in the single-tenant net-lease retail, office and industrial sectors reached a new all-time low. Single-tenant industrial cap rates compressed by 13 basis points to 6.75 percent, while retail cap rates compressed by six basis points to 6 percent and office cap rates remained at third-quarter levels (6.9 percent), according to The Boulder Group.

“Cap rates continued at record low levels due to the historically low interest rate environment combined with a flight to quality in the net-lease sector by investors,” said Randy Blankstein, president, The Boulder Group. “Industrial cap rates experienced the greatest movement, resulting from ecommerce’s accelerated growth during the pandemic.”

While cap rates in the fourth quarter reached unchartered low levels for all three-asset classes, there is uncertainty looming in 2021. There is a mixed forecast from net-lease investors as it relates to future cap rate movement with the aforemen