Q3 2021 Cap Rate Trends & Effects of Supply Chain

Cap rates continue to compress as significant investor demand combined with limited supply of quality net lease assets remains the primary.

Quantum Real Estate Advisors, Inc. research shows cap rates in the single-tenant retail net lease sector reached a historic low. In the third quarter of 2021, we have seen the average cap rate compress 50 basis points from just a year ago. According to CoStar, the average cap rate for a net lease retail asset is now 6.10%, which is a significant drop from just a year prior where we saw an average cap rate of 6.60%.

High-quality retail tenants with long-term leases experienced the biggest decline in cap rates of any asset. Investment grade-rated tenants in the Auto, Pharmacy, and Dollar Store sectors exhibited the greatest amount of cap rate compression year-over-year.