Net Lease Market Report Q3 2024

Executive Summary

In the third quarter of 2024, the net lease market continued its trend of rising cap rates across all asset classes: retail, office, and industrial. This trend reflects the ongoing impact of higher interest rates and reduced transaction volumes, with property supply rising by 6% compared to the previous quarter. These conditions further favor buyers, who now have increased leverage in the market.

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Key Market Trends

Cap Rates

The rise in cap rates for the 10th consecutive quarter is largely due to persistent high interest rates and a stagnant supply of net lease properties on the market. Limited transaction activity from both private and institutional buyers has also contributed to the increased inventory.

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Market Supply

The supply of single-tenant net lease properties grew by 6% from Q2 to Q3 2024, driven by tenant expansion plans and sellers listing properties due to factors such as loan maturities and tenant concentration issues.

Forecast for the Fourth Quarter of 2024

• Cap Rate Outlook: While cap rate expansion is expected to persist, any additional rate increases may be tempered if there are further cuts by the Federal Reserve, potentially boosting transaction velocity.

• Investor Focus: Buyers are anticipated to be selective, favoring properties with robust real estate fundamentals and strong tenants, especially in markets where they can negotiate higher yields.

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Questions or Comments for the Team?


Reach us at info@trinety.com or call 805-TRINETY (874-6389).

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