Q2 2026 Net Lease Cap Rate Report

Executive Summary

The second quarter of 2026 offered the clearest evidence to date that net lease pricing has found a floor. The average single-tenant retail cap rate finished the quarter at roughly 6.45 percent, a movement of just 4 basis points from the first quarter and the smallest quarter-over-quarter change since the repricing cycle began. Industrial net lease assets averaged approximately 6.1 percent and medical properties roughly 6.3 percent, with both sectors showing modest compression as capital rotated toward longer-duration leases and stronger credit.

The spread between average net lease cap rates and the 10-year Treasury narrowed to approximately 215 basis points during the quarter, the tightest reading in six quarters. That compression reflects two forces working in the same direction: benchmark yields that drifted modestly higher through the quarter and cap rates that have stopped rising in response. The practical consequence for buyers is that the window of outsized going-in yields relative to financing costs is beginning to close, particularly for assets leased to investment-grade tenants in primary markets.

Buyer composition tells a parallel story of normalization. Exchange-motivated private capital accounted for an estimated 58 percent of transactions under 5 million dollars, consistent with the 1031 segment’s historical range after two years of elevated share. Institutional participation, which retreated sharply during the rate-driven repricing of 2023 and 2024, continued its measured return, concentrated in industrial and medical portfolios above 20 million dollars.

What’s Inside

• National overview: quarterly cap rate trends for single-tenant retail, industrial, and medical assets, set against a five-year historical series
• Sector-by-sector cap rate table: average, median, and quartile pricing across 12 net lease subsectors, from dollar stores and pharmacies to distribution facilities and dialysis clinics
• Treasury spread analysis: how the spread to the 10-year has moved over the past eight quarters and what it implies for pricing through year-end
• Buyer composition: 1031 exchange capital versus institutional and private equity buyers, segmented by deal size
• Credit and lease term pricing: how remaining lease term and tenant credit quality are being valued in the current market
• Regional differentials: cap rate variation across the four major census regions and what is driving the gaps
• Second-half outlook: our base case for the remainder of 2026, including the conditions under which compression would accelerate

Methodology Note

The figures presented in this report are illustrative and reflect the general shape of the market as our research desk reads it, rather than a tabulation of closed transactions. Cap rate averages, Treasury spreads, and buyer-composition estimates are placeholder values calibrated to plausible 2026 conditions and should be treated as directional. Investors evaluating a specific asset should verify current pricing, and current tenant credit ratings, independently. Transaction-level data will replace these figures as the firm’s dataset integration is completed.

Figures in this report are illustrative placeholder data pending integration of the firm’s live transaction dataset.