Net-Lease Cap Rates Tick Up as the Fed Takes Its Rate Cut Off the Table

Key Highlights

• Single-tenant retail net-lease cap rates rose 5 bps to 6.60% in Q2 (Boulder Group).

• Investment-grade net-lease cap rates are holding near 6.80%.

• The Fed removed the expected 2026 rate cut from its projections, resetting the discount rate.

• Transaction volume has held steady despite the higher-for-longer reset.

• Buyers are repricing rather than retreating.

The Signal

• The "rate cut is coming" trade is off; underwriting has to stand on today's cost of capital.

• Cap rates are drifting up, but liquidity has not broken.

• Credit tenancy and lease term are back to doing the pricing work.

Net lease is the cleanest read on how CRE is absorbing a higher-for-longer Fed, because its pricing is almost pure math: contractual rent divided by a cap rate that tracks the risk-free curve. When the Fed pulled its 2026 cut, that math moved — and cap rates ticked up.

The important part is what didn't happen. Volume held. A 5 bps drift with steady transaction flow is an orderly repricing, not a freeze — buyers marked to the new curve and kept transacting rather than waiting for relief that is no longer scheduled.

The structural read is a return to fundamentals. With no rate cut to underwrite toward, pricing sorts on tenant credit and lease duration again. Investment-grade paper holds near 6.80% while weaker credit has to clear wider — the spread is doing its job.

Implications

Sellers underwriting a 2026 cut into their pricing need to reset expectations; the bid is real but it's at today's curve, not next year's hoped-for one. Buyers get a cleaner market where credit and term — not macro timing — determine value. For anyone financing acquisitions, the message is to stop pricing in relief that the Fed just removed from the calendar.

The rate-cut trade is dead; net-lease pricing now stands on credit, term, and today's curve.