Net Lease Sector Ends 2025 With Stability, Record Supply

(Illustration courtesy of The Boulder Group)

Cap rate stabilization in the single-tenant net lease sector continued in the fourth quarter, according to The Boulder Group, Wilmette, Ill.

The firm’s Fourth Quarter Net Lease Research Report said overall cap rates increased just one basis point to 6.81%. Retail cap rates compressed two basis points to 6.55%, office cap rates expanded 10 basis points to 8.00% and industrial cap rates remained unchanged at 7.20%.

Boulder Group President Randy Blankstein explained that late 2025 was the third straight quarter of a single basis point increase for cap rates. “Cap rates were largely unaffected in 2025 despite multiple rate cuts in the second half of the year,” he noted. (The Federal Reserve implemented its third rate cut of 2025 in December, lowering the target range by 25 basis points to 3.50% – 3.75%.)

“The slight cap rate movement in the fourth quarter of 2025 illustrates continued pricing stability supported by improving buyer-seller alignment following a period of more significant cap rate adjustment in prior years,” Boulder Group Partner Jimmy Goodman added.

Overall market supply increased by 2.5% to 5,710 properties–the highest level in more than a decade. Retail inventory rose 1.1% to 4,312 properties, office supply increased significantly by 8.2% to 685 properties, and industrial properties on the market grew 5.6% to 713, Boulder reported.

John Feeney, senior vice president with Boulder, noted bid-ask spreads tightened across all sectors, “underscoring improved pricing agreement between buyers and sellers.”