Net-Lease Investment Volume Falls by More Than Half

Executive Summary

• Net-lease investment volume fell by 54% year-over-year in Q3 to $8.5 billion, compared with a 49% drop in total commercial real estate investment volume.
• For the year ending Q3 2023, net-lease investment volume fell by 55% from the same period in 2022 to $43.6 billion. Total commercial real estate investment volume by 56% over the same time.
• Industrial & logistics' share of net-lease investment volume edged up to 52% in Q3 2023 from 51% in Q3 2022. Retail’s share rose to 28% from 25%, while the share for office fell to 20% from 25%.
• The average net-lease cap rate increased by 60 basis points (bps) to 6.2% in Q3 from a year ago. Ongoing economic uncertainty, the spike in the 10-year Treasury yield and the prospect of higher-for-longer interest rates helped drive the increase. CBRE expects that long-term interest rates and net-lease cap rates will begin to stabilize by mid-2024.
• The 10-year Treasury yield averaged 4.4% in Q3, its highest quarterly average since 2007. Spreads between the average net-lease cap rate and 10-year Treasury yield decreased to 187 bps from 213 bps year-over-year.