Net-Lease Investment Volume Surges in 2024, Driven by Strong Industrial Demand

U.S. net-lease investment surged significantly in 2024, underscoring the sector's stability and appeal to investors seeking low-risk opportunities, according to the latest research from CBRE.

Net-lease properties are characterized by a lease structure in which the tenant agrees to pay a portion or all of the taxes, insurance fees and maintenance costs in addition to rent. Total net-lease investment volume increased by 19% quarter-over-quarter and 57% year-over-year in the fourth quarter of 2024, reaching $13.7 billion. This strong performance contributed to a 13% increase in full-year 2024 net-lease investment volume, totaling $43.7 billion.

The industrial & logistics sector dominated net-lease investment activity in Q4 2024, increasing its share to 64% from 54% a year earlier. In 2024, net-lease investment volume for industrial assets increased 87% from a year earlier.

"The net-lease sector demonstrated remarkable resilience and growth in 2024, driven by its stability and appeal to investors seeking compelling risk-adjusted returns," said Will Pike, Vice Chairman of Net Lease Properties for Capital Markets at CBRE. "We anticipate continued momentum in net-lease investment, especially in retail and the industrial & logistics sector, as investors prioritize low-risk opportunities amid potential capital markets volatility in the first half of 2025."

Private investors remained the largest buyer group in the net-lease market, with their total capital volume increasing by 8% quarter-over-quarter and 15% year-over-year in Q4. Institutional investors and equity funds accounted for $2.0 billion in Q4 net-lease investment, down 39% quarter-over-quarter but up 36% year-over-year. REIT investment in net-lease properties surged by 180% year-over-year to $1.8 billion in Q4.

Cross-border investment also saw remarkable growth, with international buyers accounting for 11.6% of total U.S. net-lease investment volume in 2024, up from 5.3% in 2023. Total cross-border net-lease investment rose by 148% year-over-year to $5.1 billion, with the U.K., Canada, Australia, Singapore, and Norway representing 85% of this activity.

The average net-lease cap rate rose by 9 basis points (bps) quarter-over-quarter and 56 bps year-over-year to 6.8% in Q4 2024. The retail sector saw the largest cap rate increase, rising by 73 bps year-over-year.