Artificial intelligence could reshape the economy over the next decade, and if AI eventually replaces a large number of jobs, possibly 30% to 40% in a severe scenario, we could see weaker consumer spending, lower inflation and even deflation, which would have a major effect on interest rates, cap rates, real estate values and the stock market.
In that type of economy, office buildings could struggle as companies need fewer workers and less space, residential and apartment rents could face temporary pressure, some industrial properties could slow if consumer demand weakens, land values could become more uneven and stocks could fall sharply before the strongest technology companies recover.
By comparison, high-quality NNN properties leased to essential tenants could become one of the most defensive areas of commercial real estate, because investors receive contractual rent while the tenant is generally responsible for most property operating expenses.
This does not mean every triple net lease property is safe, because tenant credit, lease length, rent, location and the quality of the underlying real estate still matter, but the strongest NNN properties could become increasingly valuable if investors begin searching for predictable income and safety.
What Happens to Interest Rates, Cap Rates and Prices?
If AI causes major job losses and consumers spend less money, inflation could fall sharply and eventually turn into deflation, which would likely push the Federal Reserve to lower interest rates aggressively. Treasury yields could also fall as investors move toward safer investments, and lower interest rates normally allow buyers to accept lower cap rates on high-quality real estate.
Lower cap rates generally mean higher property values. For example, a property producing $100,000 in annual NOI is worth about $1.43 million at a 7% cap rate, $2 million at a 5% cap rate and $2.5 million at a 4% cap rate.
This is why the best NNN properties could benefit from both stable contractual income and cap-rate compression if deflation pushes interest rates lower.
Why NNN Properties Could Stand Out
A severe AI recession would not affect every property equally.
Office could be among the biggest losers because AI may reduce the need for many traditional white-collar jobs, while apartments and residential real estate should remain more resilient because people still need housing, although rents and home prices could weaken during a period of high unemployment.
Industrial real estate could be mixed, with logistics, food distribution, data centers and essential-goods facilities remaining strong while weaker industrial uses could face slower demand, and well-located land may hold long-term value even though speculative land without income could become harder to carry.
High-quality NNN properties can offer something different: long-term rent from strong tenants, lower management responsibility and predictable income, which could become increasingly attractive during a period of economic uncertainty.
Top 20 NNN Tenants for an AI and Deflation Economy
1. McDonald’s
McDonald’s is one of our top choices because it combines affordable food, drive-through convenience, strong brand recognition and excellent resale demand, while automation could make its business even more efficient.
2. Chick-fil-A
Strong customer loyalty, high store sales and valuable drive-through locations make Chick-fil-A ground leases especially attractive.
3. Walmart
Walmart could become even stronger during a difficult economy because consumers would likely focus more on low prices while continuing to buy groceries, medicine and household necessities.
4. Aldi
Aldi could benefit significantly if consumers become more price-conscious because food remains essential and its business model is built around value.
5. Costco
Costco combines groceries, fuel, household products and a powerful membership model, making it one of the most defensive retailers in the country.
6. Publix
Publix benefits from groceries, pharmacy services, strong customer loyalty and valuable real estate in many growing markets.
7. Wawa
Wawa combines fuel, convenience retail and affordable prepared food, giving customers several reasons to continue visiting during a recession.
8. O’Reilly Auto Parts
If consumers keep older vehicles longer instead of buying new ones, demand for batteries, brakes, replacement parts and repairs could remain strong.
9. AutoZone
AutoZone benefits from the same trend and operates in a business that AI cannot easily replace because vehicles still require physical maintenance.
10. Home Depot
Homes will always need repairs, plumbing, roofing, paint and maintenance, making Home Depot one of the strongest long-term retail tenants.
11. Lowe’s
Lowe’s provides similar protection and often occupies high-quality real estate with strong alternative uses.
12. Tractor Supply
Tractor Supply sells practical products to farmers, rural households, pet owners and homeowners, making much of its business necessity-driven.
13. Kroger
Groceries remain essential regardless of unemployment, making strong Kroger locations attractive defensive investments.
14. 7-Eleven
7-Eleven combines food, beverages, fuel and everyday necessities while often occupying valuable high-traffic corners.
15. Circle K
Circle K offers similar advantages, including convenience, fuel demand and strong underlying real estate.
16. Safeway / Albertsons
Well-located grocery stores should continue generating customer traffic even during a difficult economy.
17. Dollar General
Dollar General could benefit if consumers trade down toward lower-priced products, although investors should carefully review each location and its residual real estate value.
18. DaVita
Dialysis is a medical necessity rather than a discretionary expense, making DaVita relatively resistant to changes in consumer spending.
19. CVS
Consumers will continue needing prescriptions and healthcare products, although investors should remain selective about individual store locations.
20. Chipotle
Chipotle is more discretionary than McDonald’s but still benefits from strong branding, digital ordering, takeout and expanding drive-through capabilities.
What About Stocks?
Stocks could fall sharply during the first stage of a severe AI-driven recession as company profits and consumer spending decline, but dominant technology companies such as Microsoft, Nvidia, Amazon and Google could eventually become stronger as businesses spend more on AI, cloud computing and automation.
This could create a period where high-quality NNN properties provide more predictable income while stock investors experience much greater volatility.
The Bottom Line
If AI eventually creates major job losses and deflation, we would expect interest rates to fall, premium NNN cap rates to decline and the values of the strongest net lease properties to rise, while weaker tenants, traditional office buildings and speculative real estate could face much greater pressure.
Residential housing should remain necessary, industrial properties tied to logistics and essential goods may continue to perform well, and prime land could preserve long-term value, but each of these sectors remains exposed to changing rents, vacancies, development costs or market demand. For net lease investors, the goal should not simply be to buy the highest cap rate.
The better strategy may be to own essential tenants, strong guarantees, long leases, reasonable rents and real estate that will still be valuable many years from today.
In the AI deflation era, high-quality NNN properties could become one of the best ways to combine dependable income, lower management responsibility and long-term wealth protection.
Triple Net Investment Group can help you identify, evaluate and acquire high-quality NNN properties that fit your investment goals and guide you through the entire process from property search to closing.