December 2, 2020


  • Net-lease investment volume increased by 24.4% quarter-over-quarter in Q3 to $11.7 billion after a weak Q2. The net-lease share of all commercial real estate investment activity stood at 18.4% in Q3, well above the five-year average of 11.8%.
  • On a year-over-year basis, net-lease investment volume was down by 50.6% in Q3 due to the COVID-19 economic downturn.
  • The office sector’s share of Q3 2020 total net-lease investment increased 1.1 percentage points from the year-earlier Q3 to 33.6%, while retail’s share grew 5.4 percentage points to 23.2% over the same time period. Industrial accounted for 43.2% of net-lease investment activity, down 6.6 percentage points from Q3 2019.
  • The average net-lease cap rate was unchanged at 6.2% in Q3 due to limited investment activity. COVID-19 led to a disconnect between buyer and seller expectations, which stalled price discovery and slowed investment activity.
  • Spreads between cap rates and the 10-year Treasury rate tightened modestly to 551 basis points (bps) in Q3; however, spreads were at some of the highest levels in several years as the 10-year Treasury rate remained near historic lows (0.69%).
  • New York City, Dallas/Ft. Worth, Boston, Los Angeles and Orange County had the most net-lease investment volume in Q3. Investors also were increasingly interested in secondary and tertiary markets.

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