Retail NNN
Essential retail properties leased to creditworthy national tenants with strong operational track records.
Average Cap Rate
5.85%
+0.42%
Vacancy Rate
4.2%
-0.8%
Avg Rent (per SF/year)
$18.00
+1.2%
Market Growth
3.2%
+0.3%
Portfolio Absorption
6.1 Mo
+0.3 Mo
Lease Spreads
2.8%
+0.1%
Data as of Q4 2025 · Sources: CoStar, CBRE Research, Moody's Analytics
Market Overview
The retail NNN sector remains a cornerstone of institutional real estate investing, characterized by properties leased to creditworthy national retailers with proven business models. Major chains like Dollar General, Walgreens, CVS, and 7-Eleven dominate the landscape with extensive store networks and long-term operational stability. These convenience-oriented retailers generate consistent cash flows from essential consumer spending categories that remain resilient across economic cycles. The sector has benefited from e-commerce integration strategies by major retailers, where physical locations serve as fulfillment and pickup points, enhancing tenant viability. Modern retail NNN leases typically span 10-20 years with built-in rent escalations, providing investors with inflation protection and predictable income streams. Cap rates in this segment currently reflect the stability and creditworthiness of major tenants, with rates ranging from 5.50% to 6.50% depending on location, property condition, and lease length.
Top Tenants by Portfolio Size
| Tenant | Credit Rating | Lease Type | Units |
|---|---|---|---|
| Dollar General | BB+ | NNN | 18,432 |
| Walgreens Boots Alliance | BBB- | NNN | 8,156 |
| CVS Health | BBB | NNN | 9,854 |
| 7-Eleven Inc. | BB | NNN | 11,320 |
Recent Market Deals
| Tenant | Location | Cap Rate | Price | Square Feet |
|---|---|---|---|---|
| Dollar General | Nashville, TN | 5.50% | $2,450,000 | 8,500 |
| Walgreens | Austin, TX | 6.25% | $3,125,000 | 14,200 |
| CVS Pharmacy | Phoenix, AZ | 5.75% | $2,890,000 | 12,000 |
| 7-Eleven | Denver, CO | 6.10% | $1,850,000 | 3,500 |
Market Outlook
The retail NNN market is experiencing a measured but optimistic outlook through 2026 and beyond. Consumer spending on essentials continues to drive performance, particularly in convenience categories served by Dollar General and similar discount retailers. The integration of omnichannel retail models has strengthened tenant fundamentals, as brick-and-mortar locations increasingly serve as critical distribution points for online orders. Capital flows remain strong into this sector due to its defensive characteristics and income stability. Rent growth is expected to continue at 2-3% annually, with selective geographic markets seeing stronger appreciation. Competition from e-commerce persists but is evolving from a threat into an opportunity for properties positioned as fulfillment and click-and-collect hubs. Investors should monitor tenant operational metrics closely and focus on leases with strong escalation clauses and long remaining terms.
Key Investor Tips
Prioritize properties with tenants having investment-grade or strong speculative-grade credit ratings (BBB- or higher) to ensure lease stability and reduce default risk.
Analyze rent escalation structures carefully—leases with CPI adjustments or fixed annual increases of 2%+ provide inflation protection and income growth potential.
Evaluate property locations near population centers and retail corridors with strong demographic fundamentals and limited oversupply to maximize long-term asset appreciation.
Consider the tenant's omnichannel strategy and whether the property serves as an effective fulfillment or customer service point, which enhances long-term viability in the modern retail environment.
Assess lease length and remaining term—investments in properties with 8+ years of lease remaining offer reduced refinancing and renewal risk compared to near-term expiration dates.
Monitor cap rate trends by geography and tenant type; off-market deals often emerge from smaller independent owners seeking liquidity without auction-driven price compression.
Data and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Statistics may be estimated from publicly available sources and should be verified with primary data providers before use in investment decisions. Tenant information is sourced from public filings and may not reflect current conditions. Past performance does not guarantee future results.