The Boulder Group announced the release of its 1st Quarter Net Lease Research Report today. The report features a comprehensive format with specific net lease sector information. Cap rates in the single tenant net lease sector increased for the 12th consecutive quarter for the overall net lease sector in the first quarter of 2025. Overall cap rates rose to 6.78%, representing a modest two basis point increase from the previous quarter. 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,” says 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% when compared to the prior quarter. Over the past two years supply has surged nearly 30%, a consequence of lessened transaction velocity and a pricing gap between buyers and sellers.
“Of all the net lease sub-sectors, the drug store sector is experiencing the slowest transaction volume and a glut of supply” adds Jimmy Goodman, Partner, The Boulder Group.
Recent news regarding private equity company Sycamore Partners acquisition of Walgreens further compounded the issue. Uncertainty over Sycamore’s long-term strategy has deepened the sub-sector’s supply and slowed deal flow. Accordingly, cap rates in the drug store sector increased by 44 basis points quarter over quarter with limited transactions.
“Cap rates in the drug store sector increased by 44 basis points quarter over quarter with limited transactions,” John Feeney, Senior Vice President, The Boulder Group adds.
The net lease market continues to adjust to the higher rate environment experienced in recent years. Transaction volume increased in the fourth quarter and the expectation is that there will be a slight uptick in volume in 2025. Investors will be carefully monitoring the capital markets following the Fed’s decision to hold rates steady following their March meeting. If short term rates continue to drop in the near term and uncertainty remains in the overall financial markets, net lease activity is expected to increase but nowhere near pricing or transactions volume in peak times (2020-2021).
To view the full report: https://bouldergroup.com/media/pdf/2025-Q1-Net-Lease-Research-Report.pdf
About The Boulder Group
The Boulder Group is a boutique, Chicago-based investment real estate services firm specializing in transaction and advisory services for single tenant net lease properties. Founded in 1997, the firm has closed over $9 billion of net lease property transactions. The firm provides a full range of brokerage, research, advisory, and financing services nationwide. The level of annual, single-tenant transaction volume consistently ranks the firm in the top 10 companies nationally, according to industry benchmarks determined by CoStar and Real Capital Analytics.
Media Contact
Company Name: The Boulder Group
Contact Person: Randy Blankstein
Email: Send Email
Phone: 8478816388
Address:3520 Lake Avenue Suite 203
City: Wilmette
State: Illinois
Country: United States
Website: https://www.bouldergroup.com/NNN-Properties-For-Sale.html