6.1 Percent Cap Rate on Single-tenant Retail is Historic Low

Strong demand from private investors has pushed the cap rate on the single-tenant net lease retail sector down to 6.1 percent in the third quarter of 2016, another historic low, according to John Feeney, vice president, The Boulder Group, writing in the company’s publication, “The Net Lease Market Report Q3 2016.

“During the same period, cap rates for the office and industrial sectors decreased to 7.08% and 7.14% respectively. The overall net lease market remains active with 1031 and private investors due to the passive nature of the leases and attractiveness of relative investment returns when compared to other asset classes,” according to the report.

The net lease market should stay strong for the rest of the year with the expectation that cap rates will hold firm, according to Feeney: “The market will remain favorable to sellers as investors continue to seek this asset class due to the passive nature of the leases and institutional and fund investors attempt to reach fund allocations by years end.”

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