Net-Lease Investment Recovery Continues

Executive Summary

• Q1 net-lease investment volume increased by 9% year-over-year in Q1 to $9.6 billion. Total commercial real estate investment volume increased by 14% year-over-year.
• For the year ending Q1 2025, net-lease investment volume increased by 21% year-over-year to $44.6 billion. Total commercial real estate volume over the same period increased by 18%.
• While office and industrial assets saw a typical seasonal drop in net lease investment between Q4 and Q1, retail net-lease investment increased 11% quarter-over-quarter to $3.1 billion.
• The industrial & logistics sector’s share of net-lease investment volume increased to 49% in Q1 from 46% a year ago. The office sector’s share decreased to 19% from 29%, while retail’s share increased to 32% from 25%.
• The average net-lease cap rate increased by 7 basis points (bps) quarter-over-quarter and 48 bps year-over-year to 7.0%. However, a slowing rate of increases since Q2 2023, along with anecdotal evidence across recent transactions, indicates a broad trend of cap rate stabilization.
• The average 10-year Treasury yield fell by 11 bps quarter-over-quarter to close Q1 at 4.3%. Spreads between the average net-lease cap rate and 10-year Treasury yield increased to 269 bps in Q1 2025 from 251 bps in Q4 2024.
• CBRE expects the 10-year Treasury yield to remain above 4%, low enough to allow a continued recovery in investment activity. Net-lease investment fundamentals are expected to remain healthy, reflecting the sector’s low-risk nature and resilience during periods of uncertainty.