Posted by
Ben Smith
|
October 6, 2025
The single-tenant net lease market is entering a period of renewed opportunity. Pricing has stabilized, bonus depreciation is back in play, and the looming wave of loan maturities is set to generate motivated sellers. For groups prepared to act decisively, the next 12–18 months will provide a window to secure high-quality assets with long-term upside.
Offerd is uniquely positioned to source these opportunities off-market. Our platform and relationships give us direct access to owners, institutional players, and private investors considering discreet sales. If your group is targeting net lease acquisitions — whether for tax strategy, stable cash flow, or opportunistic value — now is the time to engage.
The single-tenant net lease (STNL) sector in the United States is navigating a transitional period in mid-2025. Investment sales volumes hit one of their lowest quarterly totals in over a decade at $9.6 billion in Q2 2025 1 , reflecting lingering effects of interest rate hikes and economic uncertainty. Despite the volume slump (down 13% from Q1 and 4.6% year-over-year)1 , cap rates are beginning to stabilize after two years of upward movement. The average STNL cap rate stands around 6.9%, only a few basis points higher than last quarter – a stark contrast to the rapid spikes of 2022-2023 2 . This levelling-off of cap rates, alongside more consistent financing availability and a narrowing bid-ask spread, indicates that buyers and sellers are finding a new equilibrium 2 3 .
Macroeconomic conditions remain a mixed backdrop. The Federal Reserve’s aggressive rate hikes in 2022-2023 have given way to a more stable outlook in 2025, with long-term interest rates hovering near 4.3% and inflation easing toward ~3% 4 5 . While borrowing costs for real estate are still roughly double what they were a few years ago (NNN loan rates ~6% vs ~3% in2021) 6 , industry sentiment has improved markedly. A Deloitte survey found 88% of global CRE executives expect revenue growth in 2025, a sharp u turn from the pessimism of 2023 7 .
~$20.7B in sales puts 2025 on track to be the weakest year for net lease sales since before the pandemic unless momentum improves 1 . All major property types experienced volume declines compared to a year ago, with industrial deals leading activity by dollar amount and office lagging. Despite the sluggish volume, pricing is gradually adjusting rather than free-falling. The average cap rate for single- tenant assets ticked up only 2–3 bps in the last quarter (to ~6.93% overall) 10 , sign a ling that the market may be approaching rate stabilization. Cap rates are about 130 bps higher than the trough in late 2022 11 , but the steep upward resets seen during 2022–2023 have moderated to a crawl. Investors are getting comfortable underwriting deals at today’s pricing levels, especially for higher- quality assets, after recalibrating to the higher interest rate environment 2 . Notably
Debt Markets and Economy: The broader capital markets landscape in Q2 2025 provides both headwinds and reasons for optimism. The Fed’s rapid tightening cycle (which lifted policy rates from near-zero to ~5%by 2023) has succeeded in cooling inflation to ~3–3.5% 5 , and policy makers have moved to a pause with hints of eventual easing. Long-term interest rates, such as the 10-year Treasury yield, have settled in the mid-4% range 13 . While these rates are historically elevated, they have not derailed dealmaking – rather, buyers and sellers have slowly adjusted yield expectations, and lenders have adapted with more creative financing structures 3 . Debt for net lease acquisitions is available but remains pricier and more conservative: all-in lending rates for NNN assets are around 6%, roughly double the ultra-low financing of a few years ago 14 . This has pressured leveraged returns and kept some highly debt-dependent investors on the side lines. However, importantly, the gap between bid and ask pricing has narrowed in recent months as sellers capitulate on pricing and buyers gain confidence that cap rates won’t blow out much further 3 . Financing sentiment is cautiously improving, aided by the stability in rates. 1
On the economic front, growth has downshifted to a modest pace (forecasts for ~1.5% GDP growth in 2025) amid trade policy uncertainty and higher cost of capital . Yet the lack of a deep recession – and continued strength in employment – has buoyed commercial real estate fundamentals. Consumer spending remains resilient and corporate profits are solid, supporting tenant operations across retail and industrial segments. There is a sense that the worst-case scenarios feared in 2023 (soaring inflation, severe recession) have been avoided. In the CRE investment market, this translates into improving sentiment: more investors are preparing to “get off the side lines” in H2 2025, especially if there are even slight reductions in interest rates . In essence, while STNL deal volume year-to-date is subdued, the combination of stabilized pricing, pent-up capital, and a resilient economy sets the stage for increased activity going forward.
Retail (STNL Retail Properties)
Retail net lease assets have experienced a bifurcated performance, with essential service categories outperforming even as overall transaction volume remains tepid. In Q2 2025,single-tenant retail sales total ed $2.2 billion , a sharp 31.7% drop from the prior quarter as the sector gave back some gains after three quarters of growth . Yet on a year-over-year basis, Q2 retail investment was up ~5.7%, making retail the only STNL sector with an annual increase in volume . Cap rates for retail assets averaged ~6.97% in Q2, roughly flat (+2bps) quarter-over-quarter but about 35 bps higher than a year ago. This slight upward drift reflects continued repricing, especially for properties with shorter remaining lease term or weaker credit tenants. By contrast, cap rates for top-tier retail operators have stayed low – competition remains fierce for best-in-class quick service restaurant (QSR) chains, convenience stores, and other “essential” retail, where investor demand keeps yields compressed .
Within the retail STNL universe, 2025’s first half underscored a flight to quality and specific formats: fast- food/QSR and drive-thru restaurants, auto service canters, and discount retailers have been standout targets. Investors are gravitating toward concepts with proven resilience and strong unit-level economics. For example, drive-thru fast food andfast-casual restaurants continue to attract ample capital, backed by robust sales and corporate guarantees from well-known brands . Likewise, automotive service and parts retailers (including auto repair shops and tire centre) saw robust activity, as their long-term leases and steady demand profile (cars always need servicing) appeal to net lease buyers .Convenience stores and gas stations – especially those leased to top operators like7-Eleven – traded frequently in early 2025, underscoring investor appetite for essential retail with high daily foot traffic . On the value-oriented end, dollar stores and discount retailers remained a bright spot; despite headlines about some store closures, chains like Dollar General and Dollar Tree continue expansion and draw in buyers seeking high cap rates with investment-grade tenancy . Even freestanding grocery stores (e.g. Aldi, smaller grocer formats) garnered attention, benefiting from consistent shopper demand and favour from budget-conscious consumers .
Retail Metrics: The table below highlights median cap rates, pricing, and H1 2025 sales volumes for key single-tenant retail categories:
Retail Subsector H1 2025 Sales Volume Median Cap Rate Median Price per SF
Quick Service
Restaurants(QSR) $1.01 Bn 5.6% $751
Full-Service
Restaurants $1.07 Bn 6.5% $469
Convenience
Stores $0.80 Bn 5.4% $925
Drugstores
/Pharmacies $0.44 Bn 7.7% $257
Dollar/Discount
Stores $0.53 Bn 7.1% $166
Retail Trends: Overall, the retail net lease sector is in a more balanced phase by mid-2025.Cap rates have largely stabilized after rising last year, and pricing is holding firm for quality assets . Investors have adjusted to the “new normal” of higher interest rates and are underwriting more conservatively, with a keen focus on tenant credit, lease duration, and rent-to-sales ratios. Well-located, long-term leased retail properties with strong credit tenants (think Walgreens or Chick-fil-A ground leases, for instance) remain in high demand and face little discounting pressure. By contrast, lesser quality or short-term leased deals are seeing extended marketing times and wider bid-ask spreads as buyers demand a premium yield for perceived risk . One encouraging sign is liquidity: although transaction volume is not high, the bid-ask gap in retail is narrowing and more deals are closing as price expectations converge. In the latter half of 2025, the retail STNL market is expected to stay selective but steady –pricing for core assets should remain stable, while investors increasingly favor inflation-resistant lease structures (annual bumps, etc.) to protect real returns in an uncertain economic climate . Retailers’ omnichannel strategies and downsizing efforts also bear watching, as they influence what types of stores (and lease guarantors) investors will prefer going forward .
Industrial properties continue to be the workhorse of the net lease world, garnering the largest share of investment and benefiting from strong tenant demand drivers. Industrial was the most active STNL sector in Q2 2025 with about $5.4 billion in sales, comprising over half of total single-tenant volume . Volume did decline ~4.4% from Q1 and 6.6%year-over-year as some investors tapped the brakes, but interest remains high for mission-critical logistics and manufacturing assets . Cap rates for industrial net lease assets have shown only very modest movement – the Q2 average was ~6.55%, up just 1 basis point from the prior quarter and roughly 11 bps higher than a year ago . This gentle rise (much smaller than in other property types) suggests pricing for industrial STNL is nearing equilibrium. Investors are accepting slightly higher yields than the 5%–6% range at the 2021 market peak, but the sector’s robust fundamentals have prevented any drastic repricing. In fact, competition remains intense for top-quality industrial deals, and cap rates can still be in the 5%–6% range for the best assets (long leases to investment-grade tenants in prime locations) . Strong rental growth in many industrial markets and lack of suitable inventory have underpinned values. Several trends are shaping industrial net lease investments in 2025:
● Build-to-Suit Boom: New industrial construction has shifted heavily toward build-to-suit projects for specialized uses. High-tech manufacturing facilities (especially electric vehicle and battery plants) and mega-warehouses tailored for specific tenants are leading development . These properties often come with 15+ year leases and significant tenant investment, allowing them to command premium pricing (often low caprates) despite their large size . Investors are eager to acquire these mission-critical assets, essentially viewing them as bond-like, long-term holds with credit- worthy tenants.
● Cold Storage Expansion: Demand for cold storage (refrigerated logistics) facilities is climbing, driven by growth in online groceries and pharmaceuticals. New cold storage projects are underway, though rising construction costs and site constraints are tempering how quickly supply comes online
For investors, cold storage net leases can offer slightly higher yields, but also strong rent growth and tenant stickiness. Expect this niche to gain more attention, although deals are limited by the specialized nature of the buildings.
● Industrial Outdoor Storage (IOS): A newer niche gaining traction is low-covered land / outdoor storage sites – essentially truck yards, container storage and equipment storage facilities. These simple industrial sites (often just land with minimal structures) have become hot targets for certain investors due to their low capital expenditure needs and strategic locations near ports and logistics hubs . Competition for IOS properties intensified in 2025, which has started to push their pricing up (cap rates compressing as more buyers chase limited supply) . This reflects a broader search for yield and the attractive fundamentals of logistics-adjacent real estate.
Looking ahead, the industrial STNL outlook remains positive yet selective. With a potential economic slowdown, investors are focusing on assets with strong tenant credit, long lease terms, and strategic locations (major distribution corridors, manufacturing hubs) . The industrial sector’s long-term demand drivers (e-commerce, supply chain reconfiguration, on-shoring of production) continue to support occupancy and rent growth. Even though sales volume has moderated from record highs, most market participants expect industrial net lease to retain its “darling” status – it’s still the top target for many 1031 exchange buyers and institutions rotating out of riskier sectors . Barring a major shock, cap rates for industrial are likely to hold steady, and could even compress slightly if interest rates begin to ease and capital that sat on the side lines re-enters the fray.
Office (STNL Office Properties)
The single-tenant office segment remains the most challenged of the three major property types, amid a broader office sector slowdown. Q2 2025 STNL office sales were approximately $1.9 billion, down 7.3% quarter-over-quarter and about 9% year-over-year .Investor caution around office is still high, especially for non-essential or older office properties, given secular headwinds (remote work, higher capex needs, soft occupancy in many markets). As a result, pricing for office net lease assets has adjusted more significantly: cap rates averaged ~7.25% in Q2, after rising 3 bps in the quarter and roughly 27 bps year-over-year . Office cap rates are now ~118 bps above their low point in early 2022 – are flection of the perceived risk and weak liquidity in this sector. However, even here there are signs of stabilization: the pace of cap rate increase has slowed notably in the past two quarters, and buyers are selectively stepping up for high- quality office deals at the right price .
A sharp bifurcation is evident in office STNL performance. Premium assets with strong tenancy can still trade at impressive valuations, while generic office buildings struggle to attract buyers. For example, one of Q2’s headline transactions was the sale of a newly built, fully leased Class A office in Bellevue, WA (part of a tech-oriented mixed-use district) for over $900 per square foot. The property was leased long-term to Meta (Facebook), and its sale at such a high price/SF illustrates that top-tier credit and construction will command top dollar even in a soft office market. In contrast, older or commodity single-tenant offices (especially those with near-term lease expirations or tenant financial concerns) are seeing deep discounts and few takers. Many owners in this category are choosing to hold or refinance rather than sell at today’s depressed bids.
Office Investor Profile: The buyer pool for STNL office has notably shifted in 2025. REIT shave virtually pulled out of office acquisitions – they made up just 2% of single-tenant office buyers in the first half of 2025, a steep drop from ~26% the year prior . With publicly traded net lease REITs focusing on industrial and retail deals (and nursing their own office exposure), private investors and institutional buyers have filled the void. Private buyers accounted for about 43% of office purchases in H1 2025, reclaiming the dominant share. Meanwhile, institutional investors (such as private equity funds and pension fund advisors)stepped up their activity, comprising 34% of office buyers – the highest share for institutions in this segment since 2016 . These institutional players are often bargain-hunting for distressed or value- add office opportunities at significant discounts. The shift indicates that office net lease, in 2025, is largely a playground for opportunistic capital and high-net-worth private investors, rather than REITs or foreign buyers.
Going forward, the office STNL sector is expected to remain subdued but with pockets of opportunity. Investors will continue to be extremely selective: long-term leased head quarters or medical offices with investment-grade tenants may trade (often to all-cash private buyers who can underwrite tenant credit), whereas secondary market offices or those with leasing risk will see limited demand. Cap rates for the office deals that do transact could drift a bit higher given financing challenges, but much of the price correction has likely occurred already. Any improvement in office occupancy trends or successful post-pandemic leasing stories could help sentiment. For now, office net lease is a tale of two worlds – trophy assets can still shine, but lesser assets are firmly in the shadows.
The current environment has created several capital markets themes that savvy net lease investors and brokers are watching closely:
● 100% Bonus Depreciation Returns: A game-changing development for 2025 is the permanent restoration of 100% bonus depreciation (enacted in July 2025) .This tax provision allows real estate investors to immediately write off a large portion of a property’s improvements in the first year, dramatically boosting after-tax returns. Under the renewed law, investors can take first-year depreciation deductions equal to the full cost of eligible assets, rather than following a partial phase-out asin 2023–24 . The impact on STNL deals, particularly zero-cash-flow (ZCF) and credit tenant lease (CTL) structures, is profound. Many STNL properties (e.g. fast food buildings, pharmacies, industrial facilities) have significant improvement value that can be cost-segregated and expensed. With 100% bonus depreciation, a cost segregation study on a net lease asset might yield a tax write-off 25–30 times the cost of the study itself – an extremely high ROI for tax planning. This has unlocked new investment strategies: brokers report heightened demand for “zero cash flow” deals (properties where the rent just covers the mortgage, purchased primarily for tax benefits and future equity build-up) . By using bonus depreciation, investors can shelter income from other properties or gain an immediate tax loss that enhances overall returns. Additionally, investors who qualify as real estate professionals can use these losses against active income, amplifying the benefit. In short, bonus depreciation’s return opens the door for net lease investors to buy for tax- driven reasons – a unique catalyst in 2025 that is expected to spur more transaction activity in the back half of the year.
● In-Place Debt as a Strategic Advantage: In a high-interest rate climate, assumable in-place debt has become gold. Many existing STNL assets carry mortgages originated in the low-rate era of 2018–2021, with fixed rates often in the3–4% range. For buyers, assuming or purchasing a property with this below-market debt can significantly improve cash-on-cash yields compared to taking out new financing at 6–7%. Investors are therefore actively seeking opportunities to acquire properties with long-term, fixed-rate debt already in place. The advantages are clear: predictable cash flow (the debt service is locked at a low rate, often interest-only, providing stable leverage), the ability to avoid today’s expensive refinancing or loan origination costs, and in some cases an assumption can be quicker than obtaining new financing. Properties with “debt that can’t be replaced” – meaning the existing loan terms are so favourable that no contemporary loan could match them – carry a unique premium . Sellers are using this as a marketing point, effectively selling not just the real estate and lease, but the debt as an asset. For example, a net lease retail property with a 10-year remaining loan at 3.5% interest is extremely attractive to a buyer in 2025; the assumable debt makes the deal’s overall return much higher than if the buyer had to finance at current rates. Brokers note that such assets often trade at lower cap rates (higher prices) because the in-place debt’s value is capitalized into the deal. In addition, buying a property with an assumable loan sidesteps refinancing risk – there’s no concern about having to replace financing in the near term, which is a relief given uncertain future rate movements. In sum, long-term assumable debt = competitive edge. We are seeing more marketing of “assignable loan” in STNL deal flyers, and more investors specifically targeting leveraged properties where they can step into an attractive debt structure.
● Looming Debt Maturities and Distress: On the flip side of the debt coin, the industry is bracing for a wave of loan maturities that could drive distress and forced sales. Between 2024 and 2026,
roughly $2.0 trillion in commercial real estate mortgages come due, including $570 billion in 2025 alone. A significant share of these loans were originated at sub-4%interest rates and will face major refinancing hurdles in today’s 6%+ interest rate environment. Net lease property owners are not immune – many leveraged STNL acquisitions from the past decade have loans maturing in the next 1–3 years. If the underlying property value or NOI hasn’t grown enough, refinancing at higher rates could require additional equity or result in debt service coverage shortfalls. As a result, some owners will opt (or be compelled) to sell properties as their loans mature, rather than refinance into negative leverage or default. Market observers are already noting an uptick in listings of net- leased assets where the current loan expires in the next12–24 months and the borrower prefers to exit. These could represent opportunistic buys, albeit often for assets with some issues (e.g. an office building facing vacancy upon lease expiry, or an older retail box in need of redevelopment). Distress is most evident in segments like office – where values have fallen the most – but even fundamentally sound properties might be sold if the owner cannot or will not inject capital required by lenders. The maturity wall is also forcing lenders to be flexible (extensions, workouts) rather than flood the market with foreclosures, but sale activity is expected to rise as 2025 progresses and more loans come due.
Who’s Buying Net Lease in 2025? The profile of buyers in the STNL market has shifted as the cycle evolved. Currently, private investors are the dominant buyer class, far out pacing institutional and REIT buyers by transaction count. Year-to-date, private buyers(which include high-net-worth individuals, 1031 exchange investors, family offices, and small private equity) account for roughly 50% of single-tenant acquisitions by volume . These buyers are often attracted by the stable, bond-like income of net leases and, in many cases, are less constrained by the debt markets (e.g. cash 1031 exchange buyers looking to reinvest sale proceeds). In fact, all-cash private buyers have been MVPs in 2025 – by not relying on loans, they sidestep high financing costs and can move quickly on desirable deals.
Institutional investors (larger firms such as pension funds, sovereign wealth, open-ended core funds) make up about 25–35% of the STNL buyer pool . Their share has increased slightly from a year ago in certain sectors – for example, institutions have stepped in to buy more single-tenant office recently, reaching a multi-year high of 34% of office buyers as they hunt for bargains . Generally, institutions are focusing on quality over quantity: they’ll pursue net lease portfolios or big-ticket assets (>$50M) with investment-grade tenants, often in industrial or essential retail. They have been more selective in 2025 due to tighter investment committees, but well-capitalized funds see net lease as a relatively safe haven in an uncertain economic period.
REITs and publicly traded net lease companies have pulled back considerably. In 2022,REITs were quite active, but by mid-2025 they represent only ~7% of acquisitions overall . In single-tenant office, as noted, REITs have virtually disappeared (only 2% of buyers) . Many net lease REITs are conserving capital, focusing on managing existing portfolios, or have seen their cost of equity capital rise, making new acquisitions less accretive. That said, there was a brief resurgence in late 2024 where some REITs went bargain-hunting – for instance, net lease REIT acquisition volume jumped +180% year-over-year in Q4 2024. But that has not yet sustained into 2025. We may see REITs re-enter more meaningfully if the debt markets improve or theirstock prices recover to enable accretive share issuance.
Foreign (cross-border) investors in net lease remain a minority but notable. In 2024, international buyers nearly doubled their market share to over 11% of net lease volume ,drawn by the strong dollar and the appeal of U.S. hard assets with long-term income. This included Canadian and Middle Eastern investors picking up industrial portfolios and European high-net-worth funds acquiring flagship retail assets. However, through the first half of 2025, foreign buyer activity cooled, falling to roughly 5% of the STNL buyer pool . Those who are active show a clear preference for single-tenant retail (particularly luxury or globally recognized brands) over office or industrial. For example, foreign capital has targeted net leased car dealerships, high-street retail condos, and other management-light assets that offer a dollar- denominated yield. Should global volatility increase, we might again see an uptick in cross-border net lease investment as overseas investors seek stability in U.S. real estate.
1031 Exchange buyers deserve special mention. These tax-driven buyers (often private individuals who sold another property and must reinvest proceeds) have historically been a major force in net lease, valued for their willingness to pay low cap rates for passive income. In 2025, however, many 1031 investors have been more cautious. The higher interest rate environment makes it harder for exchange buyers to justify trading into a new property with a low cap rate, since if they need financing the math can be challenging. Some are choosing to pay the tax or seek alternative investments rather than buy a 5% cap NNN property with a 6.5%loan. Nonetheless, plenty of 1031 money is still in play – especially from investors selling properties in high-tax states or those exiting active management roles (apartments, management- intensive properties) and looking for a hands-off NNN replacement. These buyers often favour Sun Belt net lease assets (for reasons discussed below) and tend to chase name-brand tenants (for peace of mind). We anticipate 1031 buyers will become more aggressive later in 2025 if interest rates start to ebb or if pricing softens a bit to boost yields.
Geographic Capital Flows: Investor capital in the net lease realm is increasingly flowing toward Sun Belt and high-growth secondary markets. Markets in the Southeast and Southwest U.S. have been standout destinations for STNL investment, thanks to superior demographic and business trends. In particular, the “SMILE” states – Texas, Florida, Arizona, North Carolina, Tennessee, and their neighbours – are attracting outsized investor interest. These states feature pro-growth economies, population inflows, and often favourable tax climates (e.g. no state income tax in TX, FL, TN) that bolster tenant performance and real estate demand . For example, Texas continues to be an engine of STNL activity, with key metros like Austin, Dallas-Fort Worth, and Houston leading deal volume, fuelled by strong job creation and corporate expansions . Florida is another hotspot – robust tourism and in-migration drive opportunities for retail (QSRs in Orlando’s tourist corridors, medical office in Tampa, etc.) and even industrial, and markets like Miami remain highly liquid for net lease trades . Arizona (Phoenix and Tucson) offers growth at a relative discount, attracting investors to new build-to-suit industrial and service retail for growing populations . North Carolina (Raleigh, Charlotte) and Tennessee (Nashville, Memphis) are similarly on the radar due to their diverse economic bases (tech, finance, healthcare, logistics) that support tenant demand for single-tenant facilities .
In contrast, some traditional gateway markets have seen less net lease influx, except for truly prime assets. High tax, lower growth regions (parts of the Northeast, Midwest) are generally trading at higher cap rates as capital seeks a risk premium to invest there. However, even within slower-growing areas, specific pockets (e.g. distribution canters in the Midwest “auto alley,” or certain suburban corridors) are seeing investment if the tenant and lease are right. Overall, the trend is clear: capital is chasing growth. Net lease investors, especially private ones, often live in or are familiar with these Sun Belt markets and are eager to buy properties there, creating a virtuous cycle of demand. The migration of people and companies to the Sun Belt translates into more expansion by net lease tenants (new stores, new warehouses), which in turn provides a pipeline of new investment product that investors eagerly absorb. We expect this geographic tilt to continue – the top five states for net lease investment volume in 2025 will likely include Texas and Florida at the forefront, and generally the Southeast/Southwest will outperform the Northeast/West Coast in volume (except for niche trophy deals).
Favorable Long-Term Debt (CMBS/CTL): Properties with assumable financing at below-market rates remain among the most attractive plays. These assets allow buyers to step into debt originated in the 3–4% era, creating superior cash-on-cash yields and eliminating near-term refinancing risk.
Bonus-Depreciation Assets: With 100% bonus depreciation reinstated, tax-driven strategies have returned to the forefront. Properties with large depreciable basis, especially zero-cash-flow and credit tenant lease structures, allow investors to unlock substantial first-year tax benefits while positioning for long-term equity growth.
Near-Term Debt Expirations: Assets leased to strong tenants but encumbered by loans originated at low interest rates in 2018–2021 are nearing maturity. Many owners face a refinancing wall at today’s higher rates and may be compelled to sell rather than inject additional equity. For buyers, this creates motivated-seller scenarios on fundamentally sound real estate.
Midway through 2025, the single-tenant net lease market is showing resilience and adaptability in the face of economic shifts. The sector has endured a period of valuation adjustment due to higher interest rates, but the worst of that adjustment appears to be over –cap rates have plateaued and investor confidence is inching back. Looking ahead to the remainder of 2025, several factors are poised to invigorate the STNL market:
● Stabilizing Financial Conditions: With the Fed likely at or near peak rates and possibly leaning toward cuts in late 2025, the financing environment should incrementally improve. Even a small dip in interest rates or simply greater certainty about future rates can unlock additional deal flow as side lined investors re-enter and sellers become more realistic. CRE capital markets sentiment is markedly more up beat than a year ago, and both debt and equity sources are ready to deploy capital for the right opportunities .
● Tax & Structuring Opportunities: The reinstated 100% bonus depreciation, as well as continuing 1031 exchange tax benefits, create powerful incentives to transact. We anticipate a wave of tax- motivated deals – for instance, high net worth investors using bonus depreciation to offset gains or income, or sellers preferring to trade into a new property via 1031 rather than face capital gains taxes. Brokers who can structure deals around these incentives (e.g. identifying properties with large depreciable basis, or matching exchange buyers to inventory) will drive volume and see success.
● In-Place Lease Security: The flight to safety in net lease will intensify. Investorswill pay a premium for assets with long-term leases (10+ years), strong guarantors, andcritical operations. These “bond- like” deals should see solid demand even if the economysoftens.
1. North marq Market Snapshot: Single-Tenant Overall Market (Q2 2025)
2. Northmarq Market Snapshot: Single-Tenant Retail (Q2 2025)
3. Northmarq Market Snapshot: Single-Tenant Industrial (Q2 2025)
4. Northmarq Market Snapshot: Single-Tenant Office (Q2 2025)
5. Colliers Research: U.S. 1H 2025 Single-Tenant Net Lease Retail Report(Colliers_Single_Tenant_Net_Lease_Retail_Report_1H_2025.pdf
)6. GlobeSt./Northmarq: Interview with Lanie Beck on Net Lease Market Trends (Aug2025)
7. Matthews Real Estate: Net Lease Trends — Riding the Roller Coaster (Sep 2025)
8. CBRE: 2025 U.S. Real Estate Market Outlook — Midyear Review
9. Moss Adams: The Commercial Real Estate Debt Dilemma — Loan Maturities (2024)
10. Offerd: Research Analysis (2025)11. Single Tenant Net Lease Market Report 2025 Updated.pdf
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