Press Release

Despite Rising Cap Rates, Net Lease Remains Strong

Research

Herndon, VA – Calkain released its latest Q2 2018 Cap Rate Report.  Calkain’s research indicates a continued moderate rise in cap rates for single tenant net lease (STNL) properties.  The quarterly change was 17 basis points,  however when viewed over the trailing 12-36 months, rates are relatively stable with an average rate in the low 6’s.  Among the various sectors in net lease, there are large variances and a deeper look into the recorded transactions show shorter lease terms and as well as more double-net (NN) leases for several sectors.

Key Findings:

  • Cap rates increased this month by 17 bps with the pharmacy and automotive sectors leading the way.  STNL cap rate has increased slightly for three straight quarters.
  • Overall, there was an uptick in the number of NN lease deals and a decline in the number of lease years remaining in the net lease sector.
  • The spread between cap rates and the 10 year treasury rates have remained under four percent for seven straight quarters.

Patrick Nutt, Calkain’s Managing Partner, stated, “The supply/demand aspect of the market is certainly shifting to a state of equilibrium.  Cap rates overall have seen an up-tick, but at a manageable pace, while core assets continue to trade at historically aggressive pricing.”  The net lease sector within commercial real estate continues to bode well, as investors remain confident in the market.  Nutt continued, “Macro-economic conditions remain favorable for net lease, with the 10 year treasury hovering in the 2.85% range and inflation remaining in-line with expectations.  We expect to see an active market in the net lease sector as real estate assets provide an excellent hedge in investment portfolios.”

Calkain Companies is a commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant net leased properties through all aspects of the transaction including advisory, brokerage, capital markets, asset management and research. Calkain has a national platform with multiple office locations throughout the entire East Coast. Additional information about the firm and listings may be found at calkain.com.

Traci BidingerDespite Rising Cap Rates, Net Lease Remains Strong

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