For single-tenant net lease (STNL) retail in the second half of 2025, Colliers reported a steady but increasingly selective environment, shaped by cautious consumer spending, tariff pressures, elevated construction costs and tighter capital markets. Vacancy held near 4.3% and new supply was still constrained by high development and financing costs.

Sales volume increased to $6.5 billion, a 14% increase from H1 2025. with the drugstore sector alone up 49%. The median cap rate for sales compressed to 6.7%, down 10 basis points, while the median price per square foot fell to $294, 4.9% lower than in H1.

“Deal activity increasingly reflected a preference for smaller format retail assets because of necessity-oriented tenants and investors’ continued focus on liquidity, operational efficiency, and long-term income
durability within the STNL sector,” wrote Anjee Solanki, Colliers national director, Retail Services & Practice Groups | U.S., and Nicole Larson, senior manager, National Retail Research | U.S.

Hanley Investment Group Real Estate Advisors arranged the purchase of two newly constructed, freestanding single-tenant properties occupied by a Taco Bell Drive-Thru and an Aroma Joe’s Drive-Thru in Manchester, NH. The sale price was $1.81 million for the two absolute triple-net ground leases in an off-market transaction.

EVPs Jeff Lefko and Bill Asher, in association with ParaSell, Inc., represented the Florida-based private buyer. The seller was a private investor based in Burlington, Massachusetts.

“We exclusively represented an all-cash private buyer from Florida (who was not in a 1031 exchange) and sourced a property with two new construction single-tenant drive-thrus through an existing client relationship,” said Lefko. “The buyer was drawn to the property’s prime retail location, proximity to schools and colleges, strong demographics, and the tenants’ long-term leases with increases.”

Built in 2023, totaling 3,450 square feet, Taco Bell Drive-Thru is located at 525 Hooksett Rd. and Aroma Joe’s is at 527 Hooksett Rd. in Manchester.

SRS Real Estate Partners Capital Markets said that over the past 18 months, the firm has sold a total of 50 drive-thru properties occupied by single-tenant, net-leased coffee shops including Starbucks, 7 Brew, Caribou Coffee, Dunkin’, Dutch Bros Coffee and Scooters Coffee House. All told, the transactions are valued at $135 million with an average closing cap rate of 5.52%. Additionally, SRS has 45 active coffee shop listings or in escrow with a total value of $124 million.

“While the investor favorite from a brand and credit perspective remains Starbucks, developers and property owners now have a much wider and growing pool of coffee users to consider when offering a coffee shop amenity to their property,” said Patrick Luther, principal & managing director with SRS. “Investors have been clamoring for these cash-flowing, low maintenance single-tenant assets especially with brands that are aggressively expanding and seeking more U.S. locations to capture a growing market share.”

The majority of SRS’ recently completed deals and those in escrow are new construction assets with fee simple ownership, ground lease (land ownership) and sale-leaseback scenarios. Due to the nature of the asset, they are overwhelmingly located in busy retail corridors and are usually a part of a larger retail center, creating strong crossover traffic and a dense customer population.

Net lease cap rates have risen again in the second quarter of 2024, with average caps increasing by 12 basis points quarter-over-quarter to 6.27%, B+E reported. Also up are the average times on the sale market, which increased by 0.8 months during Q2.

B+E’s Q2 cap rate report found that retail cap rates have risen by an average of 12 bps, with some sectors such as casual dining and dollar stores increasing by 21bps from Q1. However, cap rates for quality tenants such as McDonald’s remain relatively stable. Industrial cap rates increased by an average of 15 bps, with FedEx properties rising 39 bps to an average of 6.87%.

“The rise of the 10-year U.S. Treasury continues to put upward pressure on cap rates as investors face higher borrowing costs,” according to the report. “The [Federal Reserve] continues to cite inflation, better-than-expected economic growth and a tight labor market as factors leaving rates unchanged.”

According to Northmarq’s Single-Tenant Q1 2024 report, investment sales activity hit $11.2 billion, a 26% increase from the previous quarter. While the numbers reflect “a 4.5% decline compared to this time last year,” the Northmarq analysts note that the sector continues to perform consistently. “The first three months of 2024 put the market on a promising trajectory to surpass 2023’s total,” they added.

Investment sales volume by single-tenant asset type was as follows:

• Industrial — $4.03 billion

Cap Rate Increases

Northmarq reported that the average cap rate for the combined net-lease sector increased by 20 basis points (bps) to 6.5%. This represented “the highest average seen since mid-year 2015,” the analysts pointed out. While single-tenant office cap rates topped out at 6.81%, retail remained the lowest at 6.38%. Meanwhile, the industrial cap rate reached 6.55%, or 102 bps higher than the previous year.

“As buyers and sellers continue to adjust their pricing expectations in today’s market, further increases across all sectors should be expected as we move through 2024,” the analysts said.

Changes in Buyer Type

There’s also been a change in who’s buying these net lease properties.  During the past decade, private buyers have been prominent, making up between one-third and one-half of the activity in this sector. But during Q1 2024, public REITs became more active.

“With 36% of the overall single-tenant market, public REITs also dominated market share in the office and retail sectors,” the Northmarq report said. They weren’t as active on the industrial side, however. This doesn’t mean that private buyers are down and out, though.

Still, interest rates remain elevated. As a result, “some individual investors who aren’t being driven to act by a 1031 exchange might decide to rest on the sidelines for a little while longer,” Northmarq analysts said.

RealSource Group completed the sale of a single-tenant property occupied by Pilot Flying J Travel Center in Jurupa Valley. At $14 million, the sale reportedly set new records nationwide for both the highest sales price and price per square for a Pilot ground lease. Additionally, the closing cap rate of 4.90% establishes an all-time low for a Pilot ground lease outside Texas.

Austin Blodgett, RealSource SVP of investment sales, and associate Jonathan Schiffer represented the seller, Greens Group, based in Irvine. Blodgett and Schiffer also represented the buyer, a private investor also located in Irvine.

“This sale represents a notable milestone, setting nationwide benchmarks for a Pilot ground lease,” said Blodgett. “The acquisition also marked the buyer’s first net-lease purchase. The buyer was particularly drawn to the property’s underlying real estate value and the unique security offered by the Pilot brand, now wholly owned by Berkshire Hathaway  under the leadership of Warren Buffett, further bolstering the buyer’s confidence in the investment.”

The tenant’s absolute triple-net ground lease relieves the buyer of landlord responsibilities. “Pilot Flying J has more than 14 years remaining on the initial lease term with four five-year options and 10% rental increases every five years,” Blodgett said.