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**Ongoing Interest in CRE’s Net Lease Sector Continues to Grow**
Single-tenant net lease properties—commonly referred to as triple net lease (NNN) assets—have been a fixture of the commercial real estate landscape since the post-World War II era. Decades later, their popularity continues to grow, especially within asset types such as car washes, convenience stores, quick-service restaurants, and auto service centers.
John Chang, Senior Vice President at Marcus & Millichap, recently highlighted the growing appeal of these properties among investors.
According to data from Marcus & Millichap, transaction velocity for net lease assets increased 18% year-over-year in Q3 2025. This marks the third-highest level of annual transaction activity on record, underscoring significant momentum in the sector.
### Factors Driving Net Lease Investment
In a recent video titled “What’s Driving the Rebound in Net Lease Transaction Activity,” Chang identified several trends contributing to the renewed interest in NNN investments:
#### Tax Incentives Boosting Demand
In July 2025, President Donald Trump signed H.R. 1 into law, reinstating 100% bonus depreciation for equipment, fixtures, and qualifying real estate placed into service after January 19, 2025. This provision had previously stepped down to 80% in 2023 and 60% in 2024.
Chang emphasized that the reinstatement and permanence of bonus depreciation have reaffirmed the appeal of NNN assets, thanks to their minimal maintenance requirements and favorable tax treatment.
#### Attractive Cap Rates
Cap rates remain a key consideration for investors in NNN properties. Rates vary depending on several factors such as location, lease duration, age of the property, and lease terms.
– High-credit tenants: Cap rates in the mid-5% range.
– Mid-tier tenants: Cap rates in the high 6% range.
– Lower-tier tenants: Cap rates around 7%.
While cap rates fluctuate, lower cap rates often indicate stronger expected appreciation, enhanced pricing power for leases, and reduced perceived risk.
#### 1031 Exchange Activity
Private investors are leading the way in NNN acquisitions, accounting for 64% of all such transactions over the past year. In contrast, institutional buyers and REITs have scaled back net lease investments.
Chang noted that many private buyers are leveraging 1031 exchanges to transition out of more management-intensive properties as part of their retirement or estate planning strategies. By exchanging into NNN assets, investors can defer capital gains and depreciation recapture taxes, while also reducing day-to-day property management responsibilities.
He advises investors to consult tax professionals regarding 1031 exchange opportunities, noting that a shift into net lease properties can effectively streamline the management of a real estate portfolio.
As investor interest in net lease commercial real estate continues to rise, the sector shows no signs of slowing down, buoyed by favorable tax policies, stable income potential, and simplified ownership structures.
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