CAP RATES: LATEST TRENDS & ACTIVITY

Over the past year, Treasury rates have inched lower while most single-tenant net-lease CAP rates have continued to rise. This report breaks down the key market forces behind that divergence.

Using data through October 2025, we reviewed 10-Year Treasury trends back to 2015 and compared them with spreads across select national retail tenants, restaurant and retail categories, and medical-related tenants. Only assets with six or more years of primary term were included.

Across the fourteen (14) tenant types analyzed, CAP rates increased an average of thirty (30) basis points between the trailing-twelve-month periods ending October 2025 and October 2024. Big Box Retail, 7-Eleven, Wawa, Chipotle and Medical remained steady, while CVS experienced the largest jump, up one hundred twenty-six (126) basis points, driven by market saturation and planned 2025 store closures.

Net-lease investment volume reached $43.7 billion in 2024 and is on pace to slightly exceed that in 2025. On-market data shows a narrowing gap between list and achieved CAP rates, though elevated supply has extended marketing times. Walgreens is a key example: after its $10 billion sale to Sycamore Partners, its average list CAP rate rose forty-two (42) basis points to 7.54%, and marketing timelines increased by 34 days. Pharmacy trades have declined sharply since 2022, with only 292 CVS and Walgreens sales recorded through October 2025.

We also compared pricing in income tax–free states versus all others. Both on-market and sold assets traded at lower CAP rates in tax-free states, driven by stronger investor demand and better after-tax returns. The largest differences were seen with Chipotle and Wawa, where listings and recent sales in tax-free states were 44–67 basis points tighter than comparable assets elsewhere.

Please review the attached report and contact the Forged Real Estate team to discuss these findings in more detail.