22 August, 2019

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  • Net-lease investment volume increased by 33.8% to $20.6 billion in Q2 2019 and by 17.2% in first half to $33.4 billion.
  • Net-lease investment volume for the year ending Q2 2019 totaled $74.2 billion—the highest four-quarter total since CBRE began tracking the market in 2002. Full year investment volume is expected to surpass the 2018 total.
  • The high volume of net-lease activity has been a byproduct of an aggressive capital markets environment coupled with an influx of capital seeking compelling risk-adjusted returns.
  • Investors are increasingly focused on net-lease investment opportunities in high-growth secondary and tertiary markets. While gateway markets like San Francisco and Boston had the largest year-over-year gains in investment volume in Q2, markets such as the Inland Empire, San Diego and the East Bay made the top-10 list.
  • Overall, net-lease cap rates were stable in Q2 and are expected to remain so for the rest of 2019. Spreads over Treasuries have been gradually tightening since 2012; however, the spread widened to 432 bps in Q2 due to recent decreases in the 10-Year Treasury rate.
  • The global search for yield and portfolio diversification is attracting international investors to the U.S. net-lease market. Cross-border capital for net-lease properties reached $3.9 billion in Q2, a 78.4% increase from Q2 2018. Over the past two years, the top country sources of capital were Canada, Germany and South Korea.

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