Calkain today released its Q3 2018 Cap Rate Report. Despite four straight quarters of increases, the cap rate still remains relatively low at 6.55%, only 23 bps off our recent all-time low.

“Although we’ve seen an uptick in interest rates, the market continues to aggressively chase net lease assets. I’m cautiously optimistic we will have a solid fourth quarter,” stated Jon Hipp, Calkain’s president and CEO.

According to the report, the net lease market is on track for continued strong performance. The report includes a sector-by-sector breakdown, as well as an overall view of the single tenant net lease cap rate in addition to a few of the top brands in the net lease market.

Key highlights:

• In the short-term, interest-rate growth is expected to outpace cap rate growth.
• The two sectors at either end of the cap-rate change spectrum this quarter are dollar stores, up 45.1 bps, and pharmacies, which posted a -29.3 shift.
• The market is still in an equilibrium amongst buyers and sellers, and the mid-term elections appear to be a non-issue for the net lease investment market.
• The QSR sector is enjoying an influx of new investors, attracted by price point and what is considered an Amazon-proof asset class.

Building on cap rate performance year to date, the major trend for the coming months will be an accelerated but still moderate rise, driven by the interest rate environment. Concerns beyond those that are market-specific appear to be non-issues.

For the full report, visit here.

Calkain Companies is a commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant net leased properties through all aspects of the transaction including advisory, brokerage, debt placement, equity placement, asset management and research. Calkain has a national platform with multiple office locations throughout the entire East Coast. Additional information about the firm and listings may be found at calkain.com.