June 4, 2020

NLR_Icons_Horizontal-01

  • Net-lease investment volume increased by 34.6% to $78.9 billion for the year ending Q1 2020—the highest four-quarter total on record—as investors sought attractive yield at lower risk than other commercial real estate assets. Q1 volume ticked up 1.0% year-over-year to $13.2 billion. However, volume is expected to drop in Q2 due to the economic fallout from COVID-19.
  • Washington, D.C. was the most-favored investment market in Q1, while New York City, Los Angeles and San Jose had the most volume over the past four quarters. Investors also were increasingly attracted to net-lease investment opportunities in high-growth secondary and tertiary markets, with some of the largest four-quarter percentage gains occurring in Kansas City, the Inland Empire, San Diego, Austin, Indianapolis and Cincinnati.
  • Net-lease cap rates were stable in Q1 but are expected to rise in 2020 due to suppressed investment activity from the COVID-19 pandemic. Spreads widened to 557 bps in Q1—the most in seven years—as the 10-year Treasury rate hit a historic low of 0.7%.
  • The global search for yield and portfolio diversification continued to attract international investors to the U.S. net-lease market. Cross-border capital for net-lease properties totaled $9.3 billion for the year ending in Q1 2020, a 38.7% jump from the same period a year ago. Canada, Germany, Spain and Switzerland have been the top countries for inbound capital over the past two years.

Get Started with CBRE Capital Markets

Search Properties For Sale or Request Financing

Order an Appraisal

Stay Connected with Investor Services