3 September, 2020

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  • Net lease investment fell significantly in Q2, but its share of sharply lower commercial estate investment activity jumped to a record 20.2% from 13.3% in Q1.
  • Q2 net-lease volume fell by 61.8% year-over-year to $8.1 billion versus a 69.9% decline in total commercial real estate investment activity.
  • The industrial sector’s share of total net-lease investment increased to 48% in Q2 2020, while the office and retail sectors’ shares fell.
  • The average net-lease cap rate was unchanged at 6.3% in Q2 due to limited investment activity. Spreads widened to 559 basis points (bps) in Q2—the most in seven years—as the 10-year Treasury rate hit a historic low of 0.66%.
  • Chicago, Philadelphia, Los Angeles, the Inland Empire and Dallas/Ft. Worth had the most net-lease investment volume in Q2. Investors also were increasingly interested in secondary and tertiary markets, with some of the largest four-quarter percentage investment gains occurring in Memphis, Austin, San Antonio and Cincinnati.

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