- Net lease retail transaction volume increased 18% year-over-year through Q3 2025.
- Private buyers accounted for 71% of deals, far outpacing all other buyer segments.
- Cap rate premiums on top-tier tenants widened to 140 basis points.
- Lease term length drives significant differentiation in cap rates.
Private Investors Fuel Net Lease Retail Growth
Net lease retail transactions in the US rose sharply in 2025, with private buyers leading the charge, says the Commercial Property Executive. According to Marcus & Millichap, single-tenant net lease retail (STNL) deals saw an 18% jump in transaction volume and a 14% increase in dollar value through the first three quarters versus last year. Private buyers dominated the market, making up 71% of transactions and offsetting the drop in large-scale, entity-level deals.
Cap Rates Reflect Tenant Quality and Lease Length
The sector’s mean cap rate held at a 12-year high of 6.5%. Top-credit tenants saw a 140 basis point premium over lower-tier tenants—a spread that has widened in recent years. Lease term length also played a key role. Properties with fewer than five years remaining averaged 7.7% cap rates due to higher perceived risk. In contrast, those with 15 or more years averaged 6.1%, reflecting stronger income security. These patterns align with recent shifts in the STNL market, where investor focus has increasingly concentrated on tenant credit and lease duration.
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Why Net Lease Retail Remains Attractive
Investors favor net lease retail properties for their predictable, long-term cash flow and low management requirements. Private buyers have returned to the market, encouraged by improving interest rates and favorable tax provisions. These factors continue to position net lease retail as a stable investment option during market volatility. Market watchers expect the sector to maintain its momentum into 2025 as supportive monetary policy drives deal flow.
Outlook Remains Positive
Elevated cap rates and steady investor demand point to continued growth in the net lease retail sector. High-credit tenants and long lease terms continue to command strong pricing, reinforcing net lease retail’s position as a preferred asset class for private capital.
