Cap rates for the single-tenant net lease retail sector remained at the record low rate of 6.40 percent in the second quarter, reported the Boulder Group, Northbrook, Illinois.
Office and industrial sector cap rates experienced slight downward movement of 5 basis points and 8 basis points, respectively, between April and June, said John Feeney, vice president with the Boulder Group.
"Despite the 10-year Treasury yield reaching its highest point of 2015--2.47 percent--investor demand has continued for this asset class," Feeney said. "The increased demand in the net lease sector has caused cap rates to remain stable despite the increase in interest rates this quarter."
Owners of net lease product released more supply to the market in the second quarter in an attempt to take advantage of the low-cap-rate environment, Feeney said. Overall supply of net lease assets increased 21 percent and retail assets led all sectors at 23 percent.
"Even with an increased supply and compressed cap rate levels, bidding for net lease assets has been...