Cap Rates Level Off Across Net Lease Sectors While Investor Interest Stays Strong Article originally posted on Globe St. on October 10, 2025 The net lease sector is maintaining its steady foundational performance, according to new research by The Boulder Group. The latest data, reflecting the third quarter, reveals that most core metrics held their ground despite economic changes, with buyers and sellers finding greater alignment as capital markets stabilized throughout the period. Cap rates were virtually unchanged across most property types. The overall national cap rate in the single-tenant net lease segment increased by a single basis point to 6.80 percent, reflecting little movement compared to the previous quarter. Retail properties remained flat at 6.57 percent, while industrial properties saw a compression to 7.20 percent, down three basis points. Office cap rates climbed modestly to 7.90 percent, an uptick of five basis points from the previous period. These figures signal not only enduring stability in the net lease space but also a market in transition as participants acclimate to a new era for lending and investment. The supply of net lease properties nationwide edged down by half a percent over the quarter, a negligible change that underscores market steadiness. Retail and office inventories contracted by 1.4 percent and 1.1 percent, respectively, hinting at measured seller activity in those segments. In contrast, available industrial properties jumped six percent, pointing to increased disposition activity from owners seeking to capitalize on current demand. The balance in supply seems to have translated directly into narrower bid-ask spreads, with the gap between asking and closed cap rates tightening for retail properties, now at 29 basis points, and remaining at a comparable 30 basis points for industrial assets. Investors, particularly institutions, continue to show strong interest in net lease—though capital costs still dictate deal flow. The reduced costs, brought on by a recent Federal Reserve rate cut of 25 basis points, have yet to translate into cap rate contraction. That serves as a reminder that investor expectations and demand ultimately drive pricing in the market, rather than interest rates alone. Looking ahead, the outcome of two additional Fed meetings in 2025 is expected to shape sentiment and transaction activity through the remainder of the year. A closer look at selected single-tenant property transactions from the third quarter paints a picture of active investment across sectors. Notable deals included General Mills in Georgia, trading at $75 million with a 6.10 percent cap rate on a five-year remaining lease and Vanderlande Industries also in Georgia, selling for $34 million at a 5.69 percent cap rate. In retail, Lowe’s Home Improvement in Massachusetts closed for $32.6 million at a 6.76 percent cap rate on a six-year lease term, while Dick’s Sporting Goods in Ohio sold for $19.1 million at a 6.60 percent cap rate with 10 years left on the lease. Analysis of cap rate trends by segment reinforces these patterns. Within the auto sector, cap rates varied depending on property type and lease duration: parts sites fetched average cap rates of 6.58 percent, while service centers held flat at 6.15 percent. Lease term was a significant pricing factor, with properties boasting 16–20 years left achieving cap rates near 5.65 percent, compared to those with less than five years, which averaged 8.00 percent. Dollar stores saw slight cap rate increases for Family Dollar locations (up 10 basis points to 8.40 percent), and drug stores reflected similar incremental movement, with Walgreens cap rates rising 15 basis points to 7.90 percent. In the casual dining sector, Applebee’s posted a cap rate of 7.60 percent, while quick service restaurants such as Chick-fil-A ground leases averaged notably lower yields at 4.55 percent, confirming the premium placed on longer leases and creditworthy tenants.