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Market Intelligence
Cap rate benchmarks by sector, credit tier, and geography
Data as of Q2 2026 · Sources: Federal Reserve, FRED, CoStar, CBRE Research
Overall single-tenant net lease cap rates increased 2 bps to 6.82% in Q2 2026 (Boulder Group). Retail NNN up 5 bps to 6.60%. Industrial up 10 bps to 7.25% — the sharpest expansion as new supply absorbed. Office steady at 7.20% with elevated vacancy. Investment-grade tenants within each sector trade 100-200 bps tighter. Banking ground leases at 4.00-5.50%, top-tier QSR ground leases at 4.25-5.25%, grocery/big box at 4.50-6.00%.
Investment-grade cap rate ranges (Q1 2026): banking 4.00-5.50%, convenience/gas 5.00-6.50%, auto parts 5.75-7.00%, healthcare 5.50-7.25%, dollar stores 6.75-7.75%, pharmacy 6.50-8.00%. The 200-400 bps spread between top-tier IG tenants and non-IG tenants reflects the market's aggressive risk pricing in a higher-rate environment. Credit quality commands a premium that widens when rates rise.
Primary markets (NYC, LA, Chicago, Boston) still command 50-100 bps tighter cap rates on trophy NNN properties. Secondary markets (Raleigh, Nashville, Denver) trade at 6.5-7.0%. Tertiary markets average 7.0-8.0% cap rates. Geographic arbitrage opportunities widened in 2026 as institutional capital concentrated in primary markets.
NNN cap rates averaged 5.1% in 2021 at the market peak, then expanded to 6.8% in late 2022. The 2024 rate cuts briefly compressed cap rates before the 2025 inflation reversal pushed them back up. Current 6.82% average is near the highest level since 2010. With the 10Y Treasury at ~4.69%, the NNN spread is approximately 213 bps — wider than the 150-200 bps historical norm, suggesting cap rates are fairly pricing the rate risk and may offer relative value for income-focused investors.
NNN cap rates peaked at 5.1% in 2021, expanded to 6.8% during the 2022-2023 hiking cycle, briefly compressed in 2024 as the Fed cut 100 bps, then expanded again in 2025-2026 as inflation resurfaced. The current 6.82% average reflects a structurally higher rate environment — Fed at 3.50-3.75% with hawkish dissents, CPI at 3.4%, and 10Y Treasury near 4.69%. The ~213 bps spread to Treasuries is wider than normal, suggesting NNN may offer relative value if rates stabilize. Transaction volume remains healthy ($136B in Q1 2026, +27% YoY) as investors accept higher cap rates in exchange for stable income.
Data and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Figures may be estimated from publicly available sources and should be verified with primary data providers (CoStar, MSCI RCA, CBRE, FRED) before use in investment decisions. Past performance does not guarantee future results.