Newmark’s report on net lease transactions in the second quarter of 2024 showed a 14.71% slowdown from the same period in 2023. The dollar volume dropped from $10.74 billion to $8.93 billion, according to the analysis of data from Real Capital Analytics.
Counting the number of transactions rather than the dollar volume showed a 6.49% drop from 832 in 2023 Q2 to 778 this year. That suggests average deals dropped further in the price for the dollar volume to drop faster than the deal number.
Net lease share of total transaction volume was 20.59% in the second quarter of 2024 on a rolling four-quarter average. That’s a 270-basis-point reduction from the same period in 2023. And sale-leaseback as a percentage of total net lease was 16.17% in 2023 Q2 compared with 13.62% in 2024 Q2.
Broken out by property type, industrial went from $5.68 billion sales in 2023 Q2 to $5.07 billion this year, a fall of 10.74%. Retail saw the second biggest drop of 18.22%, from $2.25 billion to $1.84 billion. That was the smallest dollar transaction volume of the three types. Office transaction volume had the biggest fall at 20.47%, moving from $2.54 billion to $2.02 billion.
For the first half year, private investors have been the most active buyers, taking 46.5% of volume. They have been the most active since at least 2018. The second largest was institutional, representing 25.2%. Cross-border was 7.7%, REIT/listed 7.3%, and user/other being 13.3%.
Among sellers, private was 45.6%, institutional was 19.0%, user/other was 18.3%, REIT/listed was 11.3%, and cross-border was 5.8%.
Overall, Q2 was the third-lowest quarter since the opening of 2018. The two worst quarters were 2024 Q1, when the volume was $8.1 billion, and 2023 Q4, with a volume of $8.6%.
In terms of number of transactions, Q2 2024 was the worst over the same period. The second worst was Q1’s 791.
The average cap rate for industrial during the quarter was 6.48%, with retail at 6.60% and office at 6.77%.
According to Newmark, the average spread between blended net lease cap rates and the 10-year Treasury was about 217 basis points in the second quarter, a drop of 28 basis points from 2023 Q2.
