Single Tenant Net Lease Cap Rates Rise in Q3 2026 Date October 7, 2026
The Boulder Group announced the release of its Third Quarter Net Lease Research Report today. The report features a comprehensive format with specific net lease sector information. According to The Boulder Group’s Q3 2026 Net Lease Research Report, overall single tenant net lease cap rates increased 10 basis points to 6.92% in the third quarter of 2026, marking the second consecutive quarterly increase, the largest quarterly increase since 2023, and the highest level reached in over a decade. Retail cap rates increased nine basis points to 6.69%, office cap rates increased 10 basis points to 8.00%, and industrial cap rates increased three basis points to 7.28%.
“With the Federal Reserve now projecting a 4.1% federal funds rate by year-end, net lease pricing is resetting to a higher cost of capital rather than waiting for relief,” says Randy Blankstein, President, The Boulder Group. “The question for the fourth quarter is not whether capital is available for net lease investment, but what price it requires.”
The Boulder Group reported that single tenant net lease property supply decreased 0.7% quarter-over-quarter in Q3 2026 to 5,754 properties on the market, following a 12.5% increase in the second quarter. Retail supply declined 3.7% to 4,289 properties, while office supply increased 6.2% to 703 properties and industrial supply increased 11.9% to 762 properties. Bid-ask spreads widened for both retail and industrial assets in Q3 2026, with each increasing three basis points to 25 basis points, while the office spread held at 50 basis points, according to The Boulder Group’s Third Quarter Net Lease Research Report. The Federal Reserve raised the federal funds rate 25 basis points to a target range of 3.75% to 4.00% at its September meeting, its first increase since 2023. The 10-Year Treasury climbed from the mid-4% range at the start of the quarter to above 5.00% by the end of September, its highest level since mid-2007.
“Private capital and family offices are paying up for long-term credit, while leveraged investors are being far more selective about short-term product,” adds Jimmy Goodman, Partner, The Boulder Group.
The Boulder Group’s Q3 2026 Net Lease Research Report highlights a continued flight to credit quality across the single tenant net lease market. Bid-ask spreads remained narrower for the most desired assets with top tier credit tenants and long-term leases, and ground lease product for McDonald’s and Chick-fil-A continued to ask the lowest cap rates in the sector at 4.50%. With the 10-Year Treasury above 5.00% and permanent financing generally priced above net lease cap rates, additional pressure is being placed on leveraged investors and larger price point assets that rely more heavily on financing. Private buyer and family office demand has been supported by the permanent restoration of 100% bonus depreciation, which allows investors to accelerate depreciation on asset classes such as convenience stores and auto service facilities. Across the five net lease sectors covered in The Boulder Group’s report, the auto sector, which includes auto parts, auto service, and collision properties, increased two basis points to 6.47%, the dollar store sector increased three basis points to 7.52%, the drug store sector increased nine basis points to 7.94%, and corporate casual dining cap rates increased three basis points to 6.60%. In the quick service restaurant sector, corporate QSR cap rates increased five basis points to 5.90% while franchisee QSR cap rates increased two basis points to 6.87%. Among individual tenants, Wendy’s recorded the largest increase at 15 basis points to 6.00%.
“Sellers who accept where the market is today are closing transactions, and the wider bid-ask spread shows how many have not caught up yet.,” John Feeney, Senior Vice President, The Boulder Group adds.
The Boulder Group anticipates that investors will carefully monitor the capital markets following the Federal Reserve’s September rate increase, as market participants are expecting an additional rate increase before year-end, with expectations favoring the December meeting. Net lease transaction volume entered the second half of 2026 with momentum, as transaction activity experienced double digit year-over-year growth through the second quarter. The fourth quarter traditionally represents greater transaction volume than other individual quarters as funds look to fill yearly allocations; however, the increase in the 10-Year Treasury and expectations of further rate increases may alter the net lease transaction volume historically experienced in the fourth quarter. It is important to note that net lease cap rates do not move in lockstep with interest rates, as property fundamentals, tenant credit quality, lease term, and investor demand all play significant roles in cap rate movement. Investors are expected to continue prioritizing tenant financial strength when underwriting net lease investment opportunities, according to The Boulder Group.
To view the full report: https://bouldergroup.com/media/pdf/2026-Q3-Net-Lease-Research-Report.pdf
About The Boulder Group
The 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 to a substantial and diversified client base, which includes high net worth individuals, developers, REITs, partnerships and institutional investment funds. Founded in 1997, the firm has arranged the acquisition and disposition of over $11 billion of single tenant net lease real estate transactions. From 2015-2025, the firm was ranked in the top 10 companies in the nation for single tenant retail transactions by both CoStar and MSCI Real Capital Analytics. The Boulder Group is headquartered in suburban Chicago and has an office in Denver.
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