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Forward-looking projections and scenario analysis for the year ahead
NNN cap rates projected to remain flat to slightly compressed in 2026 averaging 5.2-5.4% across all property types as Fed maintains 4.5-4.75% rates
Transaction volume forecast of $34-36B represents 5-12% growth from 2025 underpinned by continued 1031 exchange activity and portfolio rebalancing
Industrial logistics cap rates expected to compress additional 25-50 bps by year-end as institutional capital continues logistics preference, while retail stabilizes at current levels
2026 cap rate environment is expected to remain constructive with modest compression driven by sustained demand for quality industrial logistics assets. Industrial NNN properties forecast at 5.0-5.2% average through year-end, down 25-50 bps from Q4 2025 levels, reflecting continued portfolio investor demand and limited new supply. Retail NNN cap rates forecast at 6.0-6.3% average, stabilizing after 2024-2025 volatility as essential services and off-price segments perform well. Office NNN cap rates projected to expand to 8.0-8.5% range as hybrid work adoption persists and space demand remains challenged. Medical office and specialty healthcare properties forecast at 5.5-5.8%, providing stable alternative to general office exposure.
| Industrial Forecast (Avg) | 5.1% |
| Industrial Change | -25 to -50 bps |
| Retail Forecast (Avg) | 6.1% |
| Office Forecast (Avg) | 8.2% |
| Med Office Forecast (Avg) | 5.7% |
2026 NNN transaction volume forecast of $34-36B represents 5-12% growth from 2025 full-year total of $32.1B. Quarterly projections: Q1 $8.2-8.8B, Q2 $8.5-9.0B, Q3 $8.8-9.2B, Q4 $8.5-9.0B. 1031 exchange activity expected to generate $9-11B quarterly reinvestment demand supporting consistent deal flow. Tax-motivated selling in Q1 and Q4 traditionally supports elevated quarterly volumes. Portfolio acquisition activity expected to exceed single-asset purchases by 55-45% ratio, reflecting continued institutional consolidation trends. New investor entry into NNN space remains moderate given current valuation levels.
| 2026 Total Volume Forecast | $34-36B |
| Growth vs 2025 | +5 to +12% |
| Q1 Forecast | $8.2-8.8B |
| Annual 1031 Exchange Volume | $9-11B |
| Portfolio vs Single % | 55/45 |
2026 forecasts assume Fed Funds rate stabilization at 4.5-4.75% through year-end with modest 25 bps potential reduction in Q4 if inflation moderates. 10-Year Treasury yields forecast at 4.0-4.4% range providing yield comparison anchor for NNN cap rates. GDP growth assumed at 2.1-2.4% reflecting moderate economic expansion. Unemployment rate forecast at 4.2-4.6%, remaining near historical lows. Inflation assumptions at 2.4-2.7% annually supporting consumer spending resilience and retail traffic. These assumptions support continued institutional capital demand for income-producing assets at current yield levels.
| Fed Funds Rate (Avg) | 4.6% |
| 10-Year Treasury Forecast | 4.0-4.4% |
| GDP Growth Assumption | +2.3% |
| Unemployment Rate | 4.4% |
| Inflation Rate Assumption | 2.5% |
Industrial logistics expected to maintain 65-70% deal flow dominance as supply chain normalization and e-commerce growth continue supporting tenant demand and valuation premiums. Retail sector forecast to stabilize at 22-25% deal flow as consolidation removes weakest tenants and essential services outperformance continues. Office sector expected to remain challenged at 3-5% deal flow, with Class B properties facing difficult market conditions. Specialty sectors (self-storage, automotive, QSR) forecast to grow to 8-10% deal flow as investors seek diversification and alternative yield opportunities. Geographic composition expected to maintain tier-1 at 35-40% and tier-2 growth markets at 60-65%.
| Industrial Forecast % | 65-70% |
| Retail Forecast % | 22-25% |
| Office Forecast % | 3-5% |
| Specialty Forecast % | 8-10% |
| Tier-1 Metro Forecast % | 35-40% |
The 2026 NNN market outlook is constructive with cap rate stability supporting continued portfolio investor demand and transaction volume growth. Industrial logistics will likely command the bulk of new capital deployment while retail stabilization creates selective opportunities. The market fundamentals remain sound with investment-grade tenant quality, lease renewal rates exceeding 94%, and geographic diversification opportunities. Portfolio investors should continue emphasizing quality industrial logistics, essential retail services, and geographic diversification into tier-2 growth markets. Market risks include potential economic slowdown in H2 2026, further office sector deterioration, and potential Fed rate increases if inflation re-accelerates. Base case scenario supports 5.1% cap rate environment and $35B transaction volume.
Research and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Forward-looking projections are estimates based on current market conditions and may not reflect actual outcomes. Data should be verified with primary sources before use in investment decisions. Past performance does not guarantee future results.