Owner-Occupant Deals Cool Amid Geopolitical Uncertainty, But Single-Tenant Deals with National Credit Are Hot
After a busy start to the year in commercial real estate, a combination of higher interest rates and geopolitical uncertainty is causing a slowdown in owner-occupant deals in the Valley. There are deals happening in some of the investment sectors, specifically Single-Tenant Net Lease properties with credit tenants, which are experiencing a combination of strong interest and active dealmaking.
Single-Tenant Net Lease properties are often considered a safety net for investors, provided they have high-quality/“credit” tenants. Some investors refer to these deals as “bondable” types of deals, effectively assured money. Convenience stores such as Circle K, quick-service restaurants such as Raising Cane’s, Taco Bell and Chick-fil-A, and similar types of national-level tenants give property owners confidence that these businesses will be operating for a long time. Top-tier tenants command the lowest cap rates, while investors willing to accept greater credit or operational risk can achieve higher yields.
R.O.I. Properties has a number of clients who were hesitant to put several of their Single-Tenant Net Lease properties on the market, citing concerns that investors may be on the sidelines, due to geopolitical concerns. Our team advised them that this is actually an ideal market in which to list them, because they function as very stable investments in a wide variety of economic conditions, and their tax efficiency is attractive to investors as well. The interest was immediate and active, with deals now in escrow at premium pricing.
National Trends in Single-Tenant Net Lease
The popularity of Single-Tenant Net Lease deals is growing nationally, not just in Phoenix.
- Single-Tenant Net Lease cap rates decreased one basis point to 6.80% in Q1 2026.
- The supply of Single-Tenant Net Lease properties declined 9.8% quarter-over-quarter in Q1 2026, a result of elevated transaction volume in Q4 2025 carrying over into the first quarter.
- Private buyers accounted for 68 percent of single-tenant retail acquisitions through the third quarter of 2025, followed by institutional investors at 8 percent.
- Transaction volume in this space is expected to remain steady in 2026, although further Federal Reserve rate cuts and the aforementioned geopolitical risks remain open questions.
The uptick in Single-Tenant Net Lease activity in Phoenix is a positive sign, underscoring the attraction of the Valley’s overall economic development activity.
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