State of the NNN market

Across the nation, retail NNN and office prices are stable, down a mere 0.3% and 0.7% from last year, respectively. In contrast, multi-family prices, on the other hand, have been slammed, falling 6.6% year over year. Industrial real estate was the only sector that saw growth momentum, up 7.0% from 2022.

Current high interest rates mean fewer triple net lease investors can afford financing, which leads to lower demand and lower asset prices. Excess cash pumped into the markets by the Fed during and before the pandemic caused asset prices to jump and cap rates to compress – but those were the glory days.

In this “new normal”, triple net lease rent growth has slowed and financing has become difficult. Investors are unsure how to price NNN deals, and market conditions remain volatile as inflation is still out of control. Until the market stabilizes, expert guidance is key.  On the flip side of all these macro-economic woes, NNN national tenants are now also more tech savvy and leaner, and have become even more customer driven. Many have also managed to remedy most of their supply chain issues by innovating and collaborating with their supply chain vendors. Here is the short list of outstanding NNN high credit national names for 2023: CVS and Walgreens; Dollar Tree and Family Dollar; 7-Eleven, and Sheetz; and Reilly’s, Pep Boys, Fresnius, etc. Cap rates for these NNN tenant brands are going to vary between 5.00% and 7.00%. Moreover, many of these household names offer long leases and highly desirable parent corporate guarantees!

Thus, retail triple net lease is going to be a solid asset opportunity in 2023. Brick-and-mortar store sales are growing, again. Many NNN lease tenants, which are well-known national retail names, continue to develop new concepts and add stores. Day Care, medical and QSR/Fast food and other types of service businesses continue to grow, quite unchanged by supply chain constraints and a faltering economy.

Historically, the “bread and butter” retailers have thrived in all market cycles – high and low – this is THE reason why NNN investors continue to repeatedly, purchase these assets. If you are grappling with the state of the NNN market, reach out to Broker Robert Gamzeh at The Triple Net Investment Group to obtain highly expert guidance in net lease investing. For years, Robert and his team continue to successfully navigate the murky state of the NNN market for our repeat clients. Meet us and get to know the world of difference we will make for your triple net lease NNN deals.

Call 202-361-3050 today and reach Robert directly for a complimentary consultation.

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