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Commercial Real Estate Cap Rates 2025: What Q4 Data Reveals About the Net Lease Market

B+E > B+E INSIGHTS > Net Lease Guide > Commercial Real Estate Cap Rates 2025: What Q4 Data Reveals About the Net Lease Market
01/28/2026 By B+E

Commercial Real Estate Cap Rates 2025: What Q4 Data Reveals About the Net Lease Market

As 2025 comes to a close, the commercial real estate market is offering clearer signals for investors navigating a shifting interest rate environment. While uncertainty defined much of the year, Q4 data shows a market that is stabilizing — and, in some sectors, quietly repositioning for renewed activity.

B+E’s Q4 2025 Net Lease Cap Rate Report provides a real-time snapshot of where pricing, supply, and investor demand converged in the final quarter of the year — and what those trends may mean heading into 2026.

Net Lease Inventory Grows as Cap Rates Hold Steady

Total net lease inventory increased modestly in Q4, reaching 4,732 listings, a 2% quarter-over-quarter rise. While total supply is nearly unchanged from year-end 2024, one metric stands out: time on market increased to 9.8 months, reflecting slower absorption as buyers remain selective.

Despite this, cap rates across many net lease sectors compressed or held firm, signaling that investor demand for credit-backed, essential-use assets remains resilient even amid elevated borrowing costs.

Car Wash Cap Rates Stay Resilient Amid Supply Surge

One of the most notable Q4 trends was the 36% quarter-over-quarter increase in car wash inventory, driven largely by the reinstatement of 100% bonus depreciation earlier in 2025.

Even with supply expanding, the average car wash cap rate closed the year at approximately 6.26%, down 38 basis points year-over-year and effectively flat throughout Q4. This stability highlights continued investor appetite for long-term, essential-service assets with predictable cash flow.

For investors, the takeaway is clear: car wash assets remain highly competitive, particularly for those prioritizing tax efficiency and long-term income visibility.

Convenience Stores Continue to Command Premium Pricing

Convenience store assets once again posted the lowest average cap rates in the net lease market, finishing Q4 at 5.62%.

This pricing reflects a combination of:

  • Strong tenant credit profiles
  • Mission-critical retail locations
  • Long-term lease structures

Texas, Florida, and California continue to anchor national retail inventory, with California posting the lowest average retail cap rate nationwide at 5.34%, underscoring ongoing demand for infill, high-barrier markets.

Pharmacy Cap Rates Reflect Ongoing Tenant Risk Repricing

At the opposite end of the spectrum, pharmacy assets recorded the highest average cap rates, closing Q4 at 7.49%.

Ongoing store closures, reimbursement pressures, and shifting healthcare delivery models continue to influence investor underwriting. While pricing has adjusted to reflect these risks, well-located pharmacy assets with strong lease structures still attract interest — particularly from buyers seeking yield in a cautious environment.

Interest Rates, Inflation, and What Changed in Q4

Macroeconomic conditions provided incremental clarity in the final quarter:

  • The 10-Year Treasury ended 2025 at 4.18%, down from its annual high
  • CPI closed the year at 2.7%, stabilizing after mid-year declines
  • The Federal Reserve implemented three rate cuts in 2025, with guidance pointing to a slower pace in 2026
  • Rather than sparking immediate cap rate compression, these dynamics have encouraged more deliberate pricing and underwriting — laying groundwork for increased transaction activity as financing conditions improve.

What Commercial Real Estate Cap Rates in 2025 Signal for 2026

The Q4 data doesn’t suggest a market rushing back to pre-2022 conditions. Instead, it points to something more constructive: a rebalanced net lease market.

Investors entering 2026 are likely to find:

  • More realistic seller expectations
  • Improved financing visibility
  • Sector-specific opportunities driven by fundamentals, not speculation

For buyers and sellers alike, understanding where cap rates have stabilized — and why — is critical to positioning ahead of the next cycle.

Download the Q4 2025 Net Lease Cap Rate Report

B+E’s Q4 2025 Net Lease Cap Rate Report delivers deeper insights across retail, industrial, and specialty sectors — including tenant-level data, state-by-state inventory trends, and real-time pricing benchmarks.

Download the full report to see where opportunities are emerging and how investors are navigating today’s net lease landscape.

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