Single tenant net lease cap rates decreased in Q1
Single tenant net lease cap rates decreased by one basis point to 6.80%, while retail cap rates remained unchanged at 6.55% in 2026’s first quarter, according to a report from The Boulder Group.
“The Federal Reserve’s decision to hold rates steady at both its January and March meetings, combined with inflation remaining above target, has pushed the expectation for meaningful rate relief further into the year,” said Boulder Group president Randy Blankstein.
The single tenant property supply in the net lease sector decreased by almost 10% versus the last quarter of 2025, Boulder reported. A key contributing factor was elevated sales transaction volume in Q4, fueled in part by 100% bonus depreciation for certain asset classes.
That transactional momentum carried into Q1 2026, consistent with the supply reduction observed across all sectors. At the same time, bid-ask spreads tightened for retail assets with spreads narrowing two basis points to 23 basis points.
The Federal Reserve held the federal funds rate steady at its target range of 3.50% to 3.75% at both its January and March 2026 meetings, maintaining a pause following three consecutive cuts in the second half of 2025.
In the final weeks of the quarter, the 10-Year Treasury rose nearly 30 basis points, reaching as high as 4.48%, driven by heightened inflation concerns stemming from rising energy prices and geopolitical uncertainty in the Middle East, according to The Boulder Group.
“What has changed over the past several quarters is that sellers have become more realistic about where the market is,” noted Boulder senior VP John Feeney. “When seller expectations and buyer underwriting are in reasonable alignment, transactions get done. The tightening in bid-ask spreads this quarter is a direct reflection of that improved pricing alignment across the retail net lease sector.”
The report anticipated that net lease transaction volume will remain steady in 2026 as buyers and sellers continue to align on pricing.
The Chicago-based Boulder Group is a boutique investment real estate service firm specializing in single tenant net lease properties. The firm provides a full range of brokerage, advisory, and financing services nationwide.
