The Boulder Group Reports Single Tenant Net Lease Cap Rates Compress to 6.80% in Q1 2026

The Boulder Group announced the release of its First Quarter Net Lease Research Report today. The report features a comprehensive format with specific net lease sector information. According to The Boulder Group's Q1 2026 Net Lease Research Report, overall single tenant net lease cap rates decreased one basis point to 6.80% in the first quarter of 2026. Retail cap rates remained unchanged at 6.55% for the second consecutive quarter, while office cap rates compressed the most, declining 10 basis points to 7.90%. Industrial cap rates decreased five basis points to 7.15%.

"Overall single tenant net lease cap rates decreased to 6.80% in Q1 2026, a one basis point decline from the prior quarter, and that compression occurred despite the 10-Year Treasury reaching 4.48% late in the quarter and the Federal Reserve holding rates steady at both its January and March meetings," says Randy Blankstein, President, The Boulder Group. "The durability of net lease transaction volume in that rate environment reflects the depth and consistency of investor demand for single tenant net lease properties as an asset class."

The Boulder Group reported that single tenant property supply in the net lease sector decreased by 9.8% compared to the prior quarter. A key contributing factor was elevated sales transaction volume in the fourth quarter of 2025, fueled in part by 100% bonus depreciation for certain asset classes. That transactional momentum carried into Q1 2026, consistent with the supply reduction observed across all sectors. Bid-ask spreads tightened for both retail and industrial assets in the first quarter, with retail spreads narrowing two basis points to 23 basis points and industrial spreads compressing four basis points to 25 basis points, according to data from The Boulder Group's First Quarter Net Lease Research Report. The Federal Reserve held the federal funds rate steady at its target range of 3.50% to 3.75% at both its January and March 2026 meetings, maintaining a pause following three consecutive cuts in the second half of 2025. In the final weeks of the quarter, the 10-Year Treasury rose nearly 30 basis points, reaching as high as 4.48%, driven by heightened inflation concerns stemming from rising energy prices and geopolitical uncertainty in the Middle East.

"The 9.8% decline in single tenant net lease property supply in Q1 2026, combined with continued transaction activity, reflects a market where investor demand for premium credit net lease assets is outpacing available inventory," adds Jimmy Goodman, Partner, The Boulder Group. "Institutional buyers, 1031 exchange investors, and private capital are competing for the same pool of investment-grade net lease properties, while non-rated and shorter-term assets face bid-ask spreads that are measurably wider, according to The Boulder Group's First Quarter Net Lease Research Report."

The Boulder Group's Q1 2026 Net Lease Research Report highlights a continued bifurcation within the single tenant net lease market. Premium credit assets with long remaining lease terms command the tightest cap rates and attract the widest range of investors, reflecting a sustained flight to credit quality. By contrast, shorter-term or non-rated net lease assets face wider bid-ask spreads and more selective buyer participation. This divergence underscores investors' heightened focus on tenant financial strength and lease duration security amid ongoing capital markets uncertainty. Increased transaction activity in Q1 2026 was consistent with supply reductions observed across all net lease property sectors, according to The Boulder Group.

"Retail bid-ask spreads narrowed two basis points to 23 basis points in Q1 2026 and industrial spreads compressed four basis points to 25 basis points, and both movements reflect sellers adjusting price expectations to align with where buyers are underwriting today," John Feeney, Senior Vice President, The Boulder Group adds. "That spread compression is the clearest indicator in The Boulder Group's net lease research that pricing consensus has improved materially across the single tenant net lease market over the past several quarters."

The Boulder Group anticipates that net lease transaction volume will remain steady in 2026 as buyers and sellers continue to align on pricing. Market participants will be closely monitoring the Federal Reserve's path forward, as expectations have shifted from two rate reductions in 2026 to a single rate cut amid persistent inflation concerns. It is important to note that net lease cap rates do not move in lockstep with interest rates, as property fundamentals, tenant credit quality, lease term, and investor demand all play significant roles in cap rate movement. Should the geopolitical environment stabilize and the Federal Reserve resume rate cuts later in the year, The Boulder Group expects net lease investment activity to gain incremental momentum. The firm's research will continue to track these trends as market conditions evolve.

To view the full report: https://bouldergroup.com/media/pdf/2026-Q1-Net-Lease-Research-Report.pdf

About The Boulder Group

The Boulder Group is a boutique investment real estate service firm specializing in single tenant net lease properties. The firm provides a full range of brokerage, advisory, and financing services nationwide to a substantial and diversified client base, which includes high net worth individuals, developers, REITs, partnerships and institutional investment funds. Founded in 1997, the firm has arranged the acquisition and disposition of over $11 billion of single tenant net lease real estate transactions. From 2013 to 2025, the firm was ranked in the top 10 companies in the nation for single tenant retail transactions by both CoStar and MSCI Real Capital Analytics. The Boulder Group is headquartered in suburban Chicago and has an office in Denver.

www.bouldergroup.com [https://www.bouldergroup.com/]

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