June 4, 2020


  • 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.

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