The first half of 2026 has confirmed what brokers began whispering in late Q4 2025: private capital is back in single-tenant net-lease (STNL) retail, and it is bidding cap rates lower faster than institutions want to admit. Meanwhile, the industrial euphoria of 2021–2023 has settled into a mature, discriminating market where sub-100k SF shallow-bay boxes hold pricing but big-box distribution has softened.
What actually moved
Across the transactions our platform tracked, weighted-average STNL cap rates dropped roughly 40 basis points versus H1 2025. The move was concentrated in credit tenants — investment-grade QSR, dollar stores, and auto parts — where 1031 buyers are competing head-to-head with syndicators.
- •Investment-grade STNL: 5.75% → 5.35% (median, H1 2026)
- •Non-rated STNL: 7.10% → 6.90%
- •Shallow-bay industrial (<100k SF): 6.25% (flat YoY)
- •Big-box distribution (>250k SF): 5.60% → 5.85% (softer)
Why the divergence
STNL is being repriced by capital, not fundamentals. 1031 exchange volume is up materially, and retiring baby-boomer owners of apartments and small industrial parks are trading into passive triple-net income. Every one of those buyers is a price-taker on the cap-rate side.
Industrial is being repriced by supply. The 2022–2023 development pipeline delivered into 2025, and vacancy in Class A distribution is climbing in Phoenix, Dallas, and the Inland Empire. Shallow-bay held because almost none was built — it never pencils versus higher-clear buildings.
What this means for the rest of 2026
Expect the STNL / shallow-bay industrial spread to keep narrowing. Both product types share the same buyer profile — private, 1031-motivated, sub-$10M check size — and both are supply-constrained. The interesting arbitrage in H2 is likely flex/industrial in secondary MSAs where cap rates still print 7.5%+ and rent growth is quietly running above the national average.