After two years of significant cap rate repricing, the NNN triple net lease market heading into 2026 looks more balanced than it has since 2021. Interest rates remain elevated compared to the 2019–2021 era, but the pace of change has slowed — and that stability is bringing buyers back to the table, particularly 1031 exchange investors who need to move capital on a deadline.
Here's what we're seeing on the ground as active NNN buyers' brokers, and where we think the best opportunities are concentrated this year.
Cap Rates Have Stabilized — for Now
The aggressive cap rate expansion of 2022–2024, driven by the Fed's rate hiking cycle, appears to have run its course for most asset types. Investment-grade single-tenant properties — McDonald's, Walgreens, 7-Eleven, Chase Bank — have largely settled into new pricing bands that reflect the current rate environment rather than the zero-rate era of 2020–2021.
For buyers, this is actually a favorable setup. You're no longer buying into a market where values are being actively pushed down by rising rates. The repricing has happened. For 1031 exchange buyers in particular, the combination of higher cap rates (more income per dollar invested) and stabilized pricing removes a lot of the uncertainty that paralyzed deal flow in 2023 and 2024.
Key takeaway: Cap rates on investment-grade NNN assets are 75–150 basis points higher today than they were at the 2021 peak. If you're rolling proceeds from a sale into a replacement property, you're getting meaningfully more yield for the same capital than you would have three years ago.
QSR Ground Leases: Premium Pricing Holds
Quick-service restaurant (QSR) ground leases — McDonald's, Chick-fil-A, Raising Cane's drive-thrus — continue to command the lowest cap rates in the NNN space, often 3.5–4.5% for corporate-guaranteed assets with long lease terms. Demand from 1031 buyers, private equity, and institutional capital has kept this segment compressed relative to the rest of the market.
The reason is straightforward: ground leases carry zero building risk. The tenant owns the improvements, which means no roof, no HVAC, no structural liability — ever. For investors seeking maximum passivity, there's no cleaner structure in commercial real estate. McDonald's and Chick-fil-A, in particular, routinely trade below 4% because buyer demand consistently outpaces supply.
There's also a structural reason why ground lease rents — and by extension their cap rates — run lower than traditional fee-simple NNN. In a ground lease, the tenant is paying to lease only the land. They construct the building entirely at their own expense, which gives them genuine skin in the game and a strong incentive to operate and renew. But because the landlord never built the improvements, there is no construction cost to recover. That means rent is never inflated to amortize a developer's capital outlay — it reflects land value alone. Lower rent produces lower NOI, and lower NOI compresses cap rates further. It's not a discount; it's a reflection of what you're actually buying.
There's a second layer to this that gets overlooked: ground lease rents are typically at or below market. That's actually where the upside lives. Cap rates are fundamentally a measure of risk — and when the rent floor is at or below what the market will bear, the risk profile improves significantly. If the tenant were to vacate, you're left with a well-located pad site where re-leasing at the same rent — or above it — is a realistic outcome. Less downside risk, more upside potential. The market prices that accordingly.
Contrast that with a build-to-suit deal. There, the developer's construction costs are fully baked into the rent, often pushing it to or well above market. Starbucks is the textbook example — many of their locations carry rents approaching $100 per square foot. The credit is strong, the income looks compelling on paper, but if Starbucks closes that location, finding a replacement tenant willing to pay the same rate is a real challenge. The rent has nowhere to go but down. That downside risk is exactly what higher cap rates are compensating for.
Dollar Stores: Watch for Selective Opportunities
Dollar General and Dollar Tree / Family Dollar have faced headwinds from store rationalization programs, with both companies closing underperforming locations across their portfolios. This has introduced pricing pressure on certain assets — particularly short-term leases in weaker demographic locations.
However, well-located Dollar General assets with strong store-level sales, healthy lease terms (10+ years), and good demographics continue to trade well. The cap rate spread between a quality Dollar General and a marginal one has widened considerably — creating real differentiation for informed buyers. Dollar stores remain one of the most common 1031 exchange replacement assets due to their lower price points ($1.5–3M range) and absolute NNN structure.
Industrial Net Lease: Amazon and FedEx Still Lead
The appetite for Amazon Last Mile and FedEx Ground net lease facilities remains strong. These are large-format industrial properties — typically 80,000–200,000+ SF — with long-term double net leases, annual rent bumps, and S&P investment-grade guarantors. Supply is constrained, which keeps pricing competitive.
For investors with larger capital requirements (often $20M+), industrial net lease offers an institutional-quality income stream that's difficult to replicate in other NNN categories. E-commerce growth trends continue to support long-term demand for last-mile distribution regardless of broader economic conditions.
Looking for NNN properties that fit your investment profile? We review hundreds of listed and off-market assets daily and provide first-look access to our clients at no cost.
View Available Properties →1031 Exchange Activity: The Dominant Buyer Pool
In every market cycle we've operated through, 1031 exchange buyers represent the largest single buyer segment in NNN real estate. That dynamic is as true in 2026 as it was in 2006. The reason is structural: investors who have sold appreciated real estate — apartments, office buildings, land, business properties — face significant capital gains exposure and need to replace capital into like-kind real estate within strict IRS deadlines.
NNN properties are, far and away, the most popular 1031 replacement vehicle. The reasons are the same ones that define the asset class: passive income, corporate tenant guarantees, and the ability to close quickly within a 180-day window. A McDonald's or Walgreens deal typically closes in 30–45 days — well inside the deadline with room to spare.
If you're approaching or in the middle of a 1031 exchange, read our full 1031 Exchange guide or contact us directly. We help buyers identify and close NNN replacement properties nationwide, and our service is completely free to the buyer.
Pharmacy Sector: Higher Yields, Higher Scrutiny
Walgreens and CVS have both gone through significant strategic restructuring — store closures, financial challenges, and changes to their real estate footprint. This has pushed cap rates on these assets higher (5.5–7%+ in many cases), which makes them attractive from a yield standpoint but demands more diligence on the buyer's end.
The key factors to evaluate: store-level sales volume, lease term remaining, whether the lease is absolute NNN or has carve-outs, and local market demographics. High-performing suburban pharmacy locations with long lease terms remain solid investments. Short-term leases in declining retail corridors require caution.
Our Outlook for 2026
We expect deal velocity to continue improving through 2026 as sellers who have been waiting on the sidelines accept the new pricing reality and bring inventory to market. The 1031 exchange pipeline remains deep. For buyers who acted cautiously in 2023–2024, this is a favorable environment to re-engage.
The NNN assets we're most bullish on for 2026: McDonald's and Chick-fil-A ground leases (scarce supply, durable demand), new-construction Dollar General in strong demographics, and NN Amazon Last Mile for larger portfolios. The assets we'd approach with more selectivity: short-term pharmacy, older QSR without recent lease extensions, and secondary-market dollar stores with flat rent structures.
As always, the specific deal matters more than the category. Reach out to us directly — we're happy to walk through your specific situation and share what we're seeing on the assets you're evaluating.