Net Lease Investing
NNN Cap Rate By Tenant
Two NNN properties can both be marketed as triple net leases and still trade at very different cap rates. One may trade around the mid-4% range, while another may trade closer to 8% or higher.
The difference often comes down to the tenant. In single-tenant net lease investing, the tenant’s credit, brand strength, lease guarantee, remaining term, and sector outlook can have a major impact on pricing.
If you’re new to cap rates, start with Understanding NNN Cap Rates, where we explain how cap rates are calculated and what causes them to rise or fall.
Key takeaways
- NNN cap rates vary widely by tenant category.
- Stronger tenants usually trade at lower cap rates because buyers view the income as more secure.
- Tenant credit, brand strength, lease term, guarantee type, and sector outlook all affect pricing.
- A higher cap rate is not automatically better; it may reflect higher risk.
- Tenant-level cap rate benchmarks are useful, but every deal still needs property-specific underwriting.
Why tenant credit matters in NNN investing
In a single-tenant net lease property, the landlord’s income depends on one tenant. If that tenant continues paying rent, the investment may perform as expected. If that tenant leaves or defaults, the property may become fully vacant.
Because of that concentration risk, buyers often price NNN properties based heavily on tenant strength. A corporate-backed, nationally recognized tenant usually commands a lower cap rate than a smaller, weaker, or unrated operator.
Simple rule: Stronger perceived tenant credit usually means a lower cap rate. Weaker perceived tenant credit usually means a higher cap rate.
Current NNN cap rate ranges by tenant
The figures below reflect Q1 2026 asking cap rate data reported by The Boulder Group’s Net Lease Research Report for typical 10 to 15 year lease terms. Actual pricing on any individual property can vary based on remaining lease term, location, rent level, tenant sales, lease structure, and guarantee type.
| Tenant | Typical cap rate range | General pricing takeaway |
|---|---|---|
| Chick-fil-A | 4.20% – 4.50% | Among the tightest pricing due to strong brand demand and buyer interest. |
| McDonald’s | 4.30% – 4.60% | Tight pricing, especially for corporate-backed leases and strong locations. |
| Wawa | 4.90% – 5.20% | Strong convenience store tenant with high investor demand. |
| CVS | ~6.80% | Pricing depends heavily on lease term, location, and pharmacy market sentiment. |
| Kohl’s | 6.90% – 7.20% | Wider pricing due to big-box retail considerations and tenant/category risk. |
| Dollar General | 6.75% – 8.50% | Wide range depending on lease term, store performance, market, and rent level. |
| Walgreens | 6.40% – 9.00% | Varies significantly by remaining lease term and investor view of pharmacy risk. |
| Family Dollar | 7.80% – 8.20% | Generally wider pricing than stronger-credit or more sought-after tenants. |
Important: These are general asking cap rate ranges. A specific property may trade inside or outside these ranges depending on the deal’s actual risk profile.
Cap rates also change with market conditions. Our article Best NNN Investments in 2026 explores the sectors and tenant categories attracting the strongest investor demand this year.
What explains the cap rate spread?
Cap rate differences are rarely random. When one tenant trades at a much lower cap rate than another, the market is usually pricing differences in credit quality, tenant demand, lease term, guarantee strength, or sector risk.
While tenant quality is critical, it’s only one piece of the puzzle. Learn what experienced investors evaluate beyond cap rates in What Makes a Great NNN Investment?
1. Brand strength and sales performance
Tenants like Chick-fil-A and McDonald’s often receive strong buyer demand because of their national brand recognition, customer loyalty, and strong unit-level performance. Investors are generally more confident that these tenants will continue operating and paying rent.
That confidence usually leads to tighter cap rates because buyers are willing to accept a lower yield in exchange for perceived stability.
2. Credit rating
Corporate credit ratings can directly affect pricing. Investment-grade tenants generally attract a deeper buyer pool, including institutional capital, which can compress cap rates.
Tenants with weaker credit, no public rating, or smaller private guarantees may trade at wider cap rates because fewer buyers are comfortable with the risk.
Keep in mind that the lease guarantor matters just as much as the brand itself. Our guide Corporate vs Franchise Tenants explains why two properties with the same logo can trade at very different cap rates.
3. Remaining lease term
Remaining lease term is one of the biggest factors that can move pricing within the same tenant category. A Walgreens with 15 years remaining may price very differently than a Walgreens with only three or four years remaining.
Shorter lease terms introduce renewal risk, re-tenanting risk, financing challenges, and uncertainty around future income. Buyers usually demand a higher cap rate to compensate for that risk.
4. Lease guarantee type
The tenant name on the building is not always the same as the entity guaranteeing the lease. A property may display a national brand, but the actual lease may be guaranteed by a franchisee or private operator.
Corporate guarantees typically price tighter than franchisee-only guarantees. Franchise guarantees can still be attractive, but buyers should evaluate the operator’s size, financial strength, unit count, and operating history.
5. Sector headwinds
Some tenant categories face broader investor caution because of changes in consumer behavior, store closures, financing difficulty, or sector-wide uncertainty. Pharmacy and certain traditional big-box retail categories have faced more scrutiny in recent years.
When buyers become more cautious toward a sector, cap rates may widen even if a specific location appears strong.
How to use tenant cap rate data as a buyer
Tenant-level cap rate benchmarks are useful for sanity-checking a specific deal. If a Dollar General is being offered at a 5.50% cap rate while comparable Dollar General deals are generally trading much wider, that deserves a closer look.
The lower cap rate may be justified by an unusually strong location, long remaining lease term, rent increases, strong store performance, or clean lease structure. It may also mean the property is overpriced relative to the market.
Conversely, a wider cap rate is not automatically a red flag. It may reflect the normal pricing range for that tenant category, a shorter lease term, or a more complex deal profile. The key is understanding what the cap rate is compensating you for.
Buyer tip: Do not compare cap rates across tenants without adjusting for credit, lease term, guarantee, location, rent level, and property type.
Questions to ask before relying on a tenant benchmark
- Who guarantees the lease? Is it corporate-backed, franchisee-backed, or privately guaranteed?
- How much lease term remains? Does the remaining term match the benchmark range?
- Is the rent sustainable? Is rent in line with market rent and tenant sales?
- What is the lease structure? Is it absolute NNN, standard NNN, NN, or something else?
- What expenses remain with the landlord? Confirm roof, structure, parking lot, capital repairs, and reimbursements.
- How strong is the location? Review traffic counts, visibility, access, demographics, and surrounding retail.
- What happens if the tenant leaves? Consider re-tenanting demand and replacement rent.
Bottom line
NNN cap rates vary significantly by tenant because the tenant is the source of the income stream. Stronger tenants, longer leases, corporate guarantees, and better locations usually trade at lower cap rates. Weaker credit, shorter terms, franchisee guarantees, and sector concerns usually require higher yields.
Tenant cap rate benchmarks are helpful, but they are only a starting point. The best buyers use them to ask better questions, not to make decisions in isolation.
Frequently asked questions
Why do NNN cap rates vary by tenant?
NNN cap rates vary by tenant because buyers price the risk of the income stream. Stronger tenants with better credit and longer leases usually trade at lower cap rates, while weaker or riskier tenants usually trade at higher cap rates.
Which NNN tenants usually have the lowest cap rates?
Tenants with strong national brands, strong credit, high buyer demand, and long-term leases usually have the lowest cap rates. Examples often include Chick-fil-A, McDonald’s, and other highly sought-after credit tenants.
Is a higher cap rate tenant better?
Not automatically. A higher cap rate may offer more yield, but it often reflects more risk, such as weaker credit, shorter lease term, lower buyer demand, or greater re-tenanting uncertainty.
Does a national brand mean the lease is corporate guaranteed?
No. Many national brands are operated by franchisees. Buyers should review the lease to confirm whether the guarantee is from the corporation, a franchisee, or another private entity.
How should I use tenant cap rate benchmarks?
Use tenant cap rate benchmarks as a pricing reference, not a final answer. They can help you identify whether a deal appears expensive, fairly priced, or unusually wide, but the specific lease, location, rent, and guarantee still need to be reviewed.
Tenant cap rate benchmarks are most valuable when combined with a full property analysis. Our guide How to Analyze an NNN Deal walks through the due diligence process investors should complete before making an offer.
Considering a specific tenant category?
QEM Estates helps buyers compare current NNN cap rate benchmarks across major tenant categories so they can understand whether a specific deal is priced fairly in today’s market.