Net-Lease Investment Volume Increases Significantly in 2024

Executive Summary

• Net-lease investment volume increased by 19% quarter-over-quarter and 57% year-over-year in Q4 to $13.7 billion. Total commercial real estate investment volume increased by 24%quarter-over-quarter and 31% year-over-year to $120.9 billion. 
• For full-year 2024, net-lease investment volume increased by 13% to $43.7 billion, while total commercial real estate volume rose by 8% to $392 billion.
• The industrial & logistics sector’s share of net-lease investment volume increased to 64%in Q4 from 54% a year ago. The office sector’s share decreased slightly to 19% from 20%, while retail’s share fell to 18% from 26%.
• The average net-lease cap rate increased by 9 basis points (bps) quarter-over-quarter
  and 56 bps year-over-year to 6.8%. Much of the overall increase was attributable to a 73-bp year-over-year rise in the average retail net-lease cap rate.
• The average 10-year Treasury yield in Q4 rose by 37 bps year-over-year to 4.4%. This resulted in a 19-bp increase in the spread between the 10-year yield and the average net-lease cap rate to 243 bps.
• CBRE expects fewer Fed rate cuts in 2025 as inflation moderates toward the central bank’s 2% target. However, a large federal budget deficit and stronger-than-expected economic growth likely will keep the 10-year Treasury yield above 4%, moderating near-term investment activity.
• Net-lease investment fundamentals are expected to remain healthy, reflecting the sector’s stability and low-risk nature.