Single-Tenant Net Lease Cap Rates Compress to 6.80%, Boulder Group Reports

(Illustration credit: Boulder Group)

Single-tenant net lease cap rates decreased one basis point to 6.80% in the first quarter, according to The Boulder Group’s Q1 2026 Net Lease Research Report.

The firm noted retail cap rates remained unchanged at 6.55% for the second consecutive quarter, while office cap rates compressed the most, declining 10 basis points to 7.90%. Industrial cap rates decreased five basis points to 7.15%.

Boulder Group President Randy Blankstein said the Federal Reserve’s decision to hold rates steady at both its January and March meetings, combined with inflation remaining above the Fed’s target, has pushed the expectation for meaningful rate relief further into the year.

“In that environment, the fact that net lease transaction volume has remained steady is an indication of how well-established the demand for this asset class has become,” Blankstein said.

The report said single-tenant property supply in the net lease sector decreased 9.8% compared to the prior quarter. A key contributing factor was elevated sales transaction volume in the fourth quarter of 2025, fueled in part by 100% bonus depreciation for certain asset classes. “That transactional momentum carried into Q1 2026, consistent with the supply reduction observed across all sectors,” the report said. “Bid-ask spreads tightened for both retail and industrial assets in the first quarter, with retail spreads narrowing two basis points to 23 basis points and industrial spreads compressing four basis points to 25 basis points.”

Jimmy Goodman, partner with The Boulder Group, said the distinction between investment-grade credit and everything else has grown more pronounced. “Institutional buyers, 1031 exchange investors, and private capital are all competing for the same pool of high-quality, long-term net lease assets, while product outside that profile is moving more selectively and at wider spreads,” he said. “Sellers who understand that distinction are pricing accordingly and transacting.”