One building, one tenant, one long-term lease.
A single-tenant net lease (STNL) property is a commercial building occupied by a single tenant on a long-term net lease (typically triple net). STNL is the dominant format for free-standing retail (Walgreens, Dollar General, Chick-fil-A), corporate offices, industrial build-to-suits, and credit-tenant medical facilities.
STNL is the simplest form of commercial real estate to own and analyze. The income is one tenant's rent. The lease is a single contract. The expenses are (on a NNN structure) zero. Investors essentially own a credit-backed coupon stream secured by real property. The simplicity is exactly the appeal — and exactly the risk.
STNL pricing is driven primarily by tenant credit and remaining lease term. A new 20-year lease to an investment-grade tenant trades at 5–6% cap rate. The same property with 5 years remaining on the lease trades 150–300 bps wider. The pricing reflects the market's assessment of re-leasing risk: a long lease to a strong tenant is essentially a bond; a short lease to a weak tenant is a real estate problem disguised as income.
The dominant STNL property types: quick-service restaurants (McDonald's, Chick-fil-A, Taco Bell); drugstores (Walgreens, CVS); dollar stores (Dollar General, Dollar Tree, Family Dollar); auto parts (AutoZone, O'Reilly, Advance); convenience and gas (Wawa, 7-Eleven, Sheetz); and industrial build-to-suits (Amazon, FedEx, distribution). Each has its own credit profile, lease conventions, and cap rate norms.
The structural risk: binary income. STNL goes from 100% to 0% the day the tenant doesn't renew. Re-leasing costs are high (TI build-out for new tenant, broker commissions, downtime), and the alternative-use value of a purpose-built building (a Chick-fil-A or a Walgreens) is often far lower than its NNN-encumbered value. Smart STNL investors think about residual value at lease end, not just current cap rate.
| Property: 4,500 sqft retail / 1.2-acre lot | |
| Scenario A: Walgreens, 18 yrs remaining | |
| Annual rent $175k → cap rate 5.50% | $3,181,818 |
| Scenario B: Dollar General, 12 yrs remaining | |
| Annual rent $175k → cap rate 7.00% | $2,500,000 |
| Scenario C: Regional bank, 5 yrs remaining | |
| Annual rent $175k → cap rate 9.25% | $1,891,892 |
A commercial building occupied by a single tenant on a long-term net lease. The investor owns a credit-backed income stream secured by real estate.
STNL has one tenant on a single long-term lease. Multi-tenant has multiple tenants with shorter, staggered leases. STNL is simpler but has binary tenant risk; multi-tenant is operationally complex but diversified.
Credit tenants with long leases produce highly predictable income — closer to a corporate bond than typical real estate. The market prices that predictability at a premium (lower cap rate).
Three outcomes: tenant renews (rent typically resets to market or with escalator), tenant vacates and landlord re-leases (often with significant TI and downtime), or landlord redevelops. Re-leasing risk drives most of the cap rate spread between long-term and short-term STNL deals.
Often yes — STNL is the most passive form of CRE ownership, popular for 1031 exchange buyers shifting out of management-intensive multifamily. The trade-off is lower appreciation potential and higher residual risk than multifamily.
Matrix funds CMBS, life-company, and bridge debt on STNL properties — pricing structured to the tenant credit, lease term, and renewal probability.
