NNN Market Trends — The 2026 Mid-Year Read
Dwaine Clarke · NNN Deal Finder / GCT Commercial
Published July 16, 2026
A standing market note — reviewed quarterly, VERIFY figures at read time — on the forces pricing the net lease inventory we work daily.
Rates set the weather
Net lease trades off the 10-year treasury plus a risk spread, so the 2022–24 rate surge repriced everything: the 4-cap era’s paper met 6-handle debt, and transaction volume paid the toll. The 2025–26 environment has been kinder — spreads rebuilt toward historical norms, lenders re-engaged, and the bid-ask standoff thawed deal by deal. What hasn’t returned: undisciplined pricing. Buyers get paid to underwrite again, which suits the buyers we represent fine.
The 1031 bid is structural
Whatever rates do, exchange money keeps arriving — every apartment and land sale mints a 45-day buyer, and net lease remains their default landing. That bid concentrates in migration states and sub-$3M price points, which is why a Florida QSR pad clears in days while an equivalent Midwest deal negotiates. Positioning inside that flow (or deliberately away from it, for yield) is a strategy choice, not an accident.
Sector rotation, briefly
Drive-thru formats keep absorbing capital — the pandemic’s operational lesson became a permanent real estate preference. Pharmacy repriced from bond-proxy to credit-work-required, rewarding buyers who read store-level signals. Car wash supply is being digested after the express-tunnel boom. Dollar stores hold their role as the market’s yield floor, with the Family Dollar divestiture adding a genuine credit spread inside the category. And medical-retail — dialysis, dental, urgent care — quietly became institutional.
What we’d underwrite differently this cycle
Three adjustments. Escalations matter more (flat leases in a 3%-inflation world are slow-motion rent cuts — price them that way). Re-lease math is back as the core discipline after a decade of term-only buying. And insurance costs — coastal wind, hail-belt roofs — now belong in every tenant-health model, because occupancy cost is occupancy cost regardless of which line it lands on. The tenant pages carry the per-brand detail this note can’t.