Net-Lease Investment Volume Surges, Driven by Strong Industrial Demand
(Illustration courtesy of CBRE)
U.S. net-lease investment surged last year, according to new research from CBRE.
The trend shows the sector’s stability and appeal to investors seeking low-risk opportunities, CBRE said in a new report on the sector.
Total net-lease investment volume increased by 19% quarter-over-quarter and 57% year-over-year in the fourth quarter, reaching $13.7 billion. “This strong performance contributed to a 13% increase in full-year 2024 net-lease investment volume, totaling $43.7 billion,” the report said.
The industrial & logistics sector dominated net-lease investment activity in late 2024, increasing its share to 64% from 54% a year earlier.
“The net-lease sector demonstrated remarkable resilience and growth in 2024, driven by its stability and appeal to investors seeking compelling risk-adjusted returns,” CBRE Vice Chairman of Net Lease Properties for Capital Markets Will Pike noted. He said he anticipates continued momentum in net-lease investment, “especially in retail and the industrial & logistics sector, as investors prioritize low-risk opportunities amid potential capital markets volatility in the first half of 2025.”
Private investors remained the largest buyer group in the net-lease market, with their total capital volume increasing by 8% quarter-over-quarter and 15% year-over-year in the fourth quarter, the report said. Institutional investors and equity funds accounted for $2.0 billion in Q4 2024 net-lease investment, down 39% quarter-over-quarter but up 36% year-over-year. REIT investment in net-lease properties surged by 180% year-over-year to $1.8 billion in Q4 2024.
Cross-border investment also saw “remarkable” growth, CBRE reported. International buyers accounted for 11.6% of total U.S. net-lease investment volume in 2024, up from 5.3% in 2023.
CBRE said the average net-lease cap rate rose by 9 basis points quarter-over-quarter and 56 basis points year-over-year to 6.8% in Q4 2024. The retail sector saw the largest cap rate increase, rising by 73 basis points year-over-year.
