Cap Rates Continue to Fall for Net Lease Properties

Posted by admin  at July 30th, 2012

The average cap rate for single tenant net leased properties has dropped 25 basis points in the second quarter of 2012. This drop is mainly due to the retail sector, which is currently favored by Net Lease Investors. As for office and industrial properties, there has been a small increase in cap rate.

Cap rates on restaurants have fallen 25 basis points. Drug retailers Walgreens and CVS hasn’t seen a change in their cap rates. McDonald’s restaurant has fallen to a 4.8 percent cap rate, and Dollar General has fallen to a 8.1 percent cap rate.

Cap rate is a good indicator for investment risk and value of an income producing property. This trend of decreasing cap rate shows that commercial property values are going up and overall risks are going down.