Rethinking NNN

@txrei_pro

Equity 124·Posted 4d ago

Conventional wisdom dictates that single-tenant NNN properties are the epitome of low-risk investments. However, the current market suggests otherwise. Buyers are growing wary of these deals due to cap rates that are becoming increasingly compressed. In contrast, mixed-use properties are garnering more attention for their potential to offer higher returns. The key factor making buyers walk away from NNN deals is the lack of upside potential. With cap rates hovering around 5-6%, the room for appreciation is limited. Meanwhile, mixed-use properties, despite being more complex, offer the possibility of renovation or repositioning, which can lead to significant increases in value. It's time to rethink the NNN hype and consider alternative investment strategies that prioritize growth over perceied stability.

1 comment

@flipped_out·4d ago

I'd like to see the vacancy assumptions and CAM reconciliation for these single-tenant NNN properties before writing them off entirely. What's the average lease term and tenant credit like? Are we talking about investment-grade tenants or smaller, regional players? I'm not convinced that mixed-use properties are the clear alternative, given the added complexity and potetnial for increased operational cotss. What kind of returns are we talikng about for these mixde-use investments, and how do they compare to the NNN deals on a risk-adjusted basis?

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