Cap rates barely moved in the second quarter, but that stability said a lot about how net lease investors are thinking: they care more about credit quality and lease term than squeezing out a few extra basis points. The Boulder Group’s Q2 2026 Net Lease Market report shows a market that is steady, selective and increasingly split between bond‑like assets and everything else.
Headline Pricing: Small Moves, Big Message
The Boulder Group reports that overall single‑tenant net lease asking cap rates edged up just two basis points in the quarter, landing at 6.82 percent. Retail moved to 6.60 percent, up 5 basis points; industrial increased by 10 basis points to 7.25 percent; and office stayed put at 7.90 percent. The changes are modest, but they underscore a key point: investors are not forcing a repricing of the asset class, even with higher financing costs.
The macro backdrop helps explain the discipline. The Federal Reserve kept the funds rate at 3.50–3.75 percent at both its April and June meetings, effectively taking a 2026 rate cut off the table, while the 10‑Year Treasury traded in a range of roughly 4.20 to 4.70 percent before settling near 4.40 percent. Rather than chase yield, net lease buyers responded by tightening their underwriting and zeroing in on tenant credit and lease duration.
Supply Is Up, But True Core Product Is Thin
Listings rose more than pricing. The Boulder Group estimates that single‑tenant net lease supply increased 12.5 percent from the first quarter to about 5,800 properties on the market. Retail drove that move, with retail listings up 16.2 percent to 4,452 properties; office and industrial supply rose more modestly. For executives watching deal flow, the numbers suggest more options—but not necessarily more core product.
High‑quality retail net lease assets with long terms and investment‑grade tenants still account for less than 10 percent of available retail inventory. Much of what has come to market is non‑credit or shorter‑term. At the same time, the spread between asking and closed median cap rates tightened by one basis point for retail and three basis points for industrial, narrowing both to 22 basis points. That compression is a clear sign that buyers and sellers are finding common ground on the best product. Ground leases with tenants such as McDonald’s and Chick‑fil‑A continue to price at the low end of the spectrum, with asking caps around 4.45 percent.
Discipline Across Auto, Dining, Discount And Drug
The sector data in the report reinforces the theme of cap rate discipline. In the auto segment, the overall auto sector asking cap rate held at 6.45 percent, even as the components moved in different directions. Auto parts assets widened 10 basis points to 6.75 percent, auto service tightened five basis points to 6.10 percent and collision centers nudged up to 6.67 percent. Longer‑term auto leases still command lower pricing: auto parts properties with 16 to 20 years remaining are at about 5.65 percent, compared with more than 8 percent for five‑year‑and‑under deals.
Corporate casual dining showed similar nuance. The Boulder Group data put corporate casual dining asking cap rates at 6.57 percent, up two basis points for the sector. Within that average, Applebee’s moved out 15 basis points to 7.75 percent, while Chili’s and IHOP each widened by 10 basis points. Olive Garden and Texas Roadhouse ground leases saw smaller moves, and Outback Steakhouse stayed flat. Investors are clearly differentiating among brands, not treating casual dining as a single story.
Discount and drug stores stayed mostly in a narrow band. The dollar store sector’s overall cap rate ticked up two basis points to 7.49 percent, with Dollar General flat at 7.15 percent, Family Dollar up to 8.75 percent and Dollar Tree a touch tighter at 7.55 percent. Here again, lease term matters: Dollar General assets with 12 to 15-year terms are around 6.85 percent, while short‑term stores can be near or above 9 percent.
Drug stores remained steady. Walgreens stayed at 8.10 percent, CVS moved slightly to 6.85 percent and the overall drug store sector held at 7.85 percent. The Boulder Group’s term data show CVS leases with 15 to 19 years remaining at roughly 6.35 percent, rising to 8.50 percent for under‑five‑year deals, while Walgreens runs from 6.85 to 9.25 percent over the same range. The market continues to reward long‑term, credit‑tenant cash flow in this category.
QSR: Tight Caps, Clear Preference For Term And Credit
Quick-service restaurants remain one of the clearest examples of cap rate discipline. Corporate QSR asking cap rates in the report are 5.85 percent, just three basis points wider than in the first quarter, while franchisee QSR assets are at 6.85 percent, up five basis points. The gap between corporate and franchisee pricing is intact and driven by credit strength and perceived durability of cash flow.
Brand‑level moves are small but telling. Chick‑fil‑A ground leases tightened to 4.45 percent, McDonald’s ground leases rose slightly to 4.45 percent, and Chipotle, Panera Bread, Raising Cane’s and Starbucks all saw minor basis‑point increases.
On the franchisee side, Wendy’s widened 12 basis points to 5.85 percent and KFC moved out 10 basis points to 6.60 percent, while Burger King and Taco Bell held flat. Corporate QSR assets with more than 20 years of term are still around 5.00 percent, compared with roughly 6.85 percent for deals with less than 10 years remaining; franchisee QSR assets range from about 6.00 to 7.55 percent over the same term spectrum.
In short, the QSR data underline the headline message of the quarter: cap rates shifted only modestly, but investors remained very clear about what they will pay for long‑term, high‑credit net lease income.
