A single-tenant net lease (STNL) property has one tenant under a lease that shifts some or all operating costs to that tenant. It can mean fewer repair decisions for you, but your rental income depends on one business paying and renewing. The lease decides how much work and expense you retain. In Q3 2026, The Boulder Group reported an overall national asking cap rate of 6.92% for the sector. That is a market benchmark, not a guaranteed return.
Updated October 8, 2026.
What STNL means, and how NNN, NN and absolute net differ
“Single tenant” describes who occupies the building. “Net lease” describes who pays the operating costs. People often use STNL and “triple net” as if they meant the same thing, but they don’t. An STNL can be leased on any of the net structures below, and the lease decides which costs land on you.
| Lease type | Tenant usually pays | Landlord usually keeps |
|---|---|---|
| Single net (N) | Rent plus property taxes | Insurance, maintenance, roof and structure |
| Double net (NN) | Rent, taxes and insurance | Roof, structure and often parking lot repairs |
| Triple net (NNN) | Rent, taxes, insurance and maintenance expenses | Payment or administration before tenant reimbursement, and any duties reserved in the contract |
| Absolute net | Broad operating, structural and casualty costs, as defined in the contract | Duties or costs the actual contract reserves to the owner |
The labels alone do not tell you everything the contract requires. Two leases both marketed as “NNN” can divide repair costs differently. Read the repair, insurance and casualty sections line by line with your adviser. Net-lease assets include drugstores, restaurants, auto parts stores, industrial buildings and offices.
Where STNL cap rates stood in Q3 2026
The Boulder Group’s Q3 2026 Net Lease Research Report puts national median asking cap rates at:
| Sector | Q2 2026 | Q3 2026 | Properties on the market (Q3) |
|---|---|---|---|
| Retail | 6.60% | 6.69% | 4,289 |
| Office | 7.90% | 8.00% | 703 |
| Industrial | 7.25% | 7.28% | 762 |
| Overall | 6.82% | 6.92% | 5,754 |
The overall rate rose by 10 basis points, or 0.10 percentage points, from Q2. Boulder describes it as the second quarterly increase in a row and the sector’s highest level in more than a decade. Its reported gap between asking and closed cap rates reached 25 basis points in retail and industrial, while office stood at 50.
These are asking rates on listed properties, not closed sales. Treat them as a benchmark for comparing a listing, not as the price you will pay.
How to read a cap rate on a net-lease deal
A cap rate is annual net operating income (NOI) divided by the price. It lets you compare income before loan payments. It does not account for every cost of ownership, your tax position or future vacancy.
Say a building is listed at $2,000,000 and its lease pays $130,000 a year. If the contract leaves you with no operating expenses, NOI is also $130,000. Divide $130,000 by $2,000,000 and you get a 6.5% cap rate. These are illustrative figures, not a listed Utopia property.
If the lease leaves operating expenses with you, subtract those expenses to arrive at NOI. Model major capital repairs and reserves separately; a broker’s quoted cap rate may not include them. Our cap rate calculator compares NOI with price and lets you test changes in value.
A lower cap rate means buyers pay more for each dollar of income. Tenant credit and lease length can help explain that price. Property location, rent growth and market demand also matter. A high cap rate should prompt questions about risk rather than a decision based only on yield.
Tenant credit and lease term set the price
With one tenant, the tenant is the investment. Boulder’s Q3 2026 figures show how far apart tenants in the same category can trade:
- McDonald’s and Chick-fil-A ground leases asked 4.50%, the lowest in the report.
- CVS asked 6.90%, and Walgreens asked 8.20%.
- Dollar General asked 7.18%, and Family Dollar asked 8.75%.
The years left on the lease matter almost as much. Here are Boulder’s median asking cap rates by remaining term in Q3 2026:
| Tenant | Longest remaining term | Shortest remaining term |
|---|---|---|
| Walgreens | 6.85% (15–19 years) | 9.30% (5 years and under) |
| CVS | 6.40% (15–19 years) | 8.20% (5 years and under) |
| Dollar General | 6.85% (12–15 years) | 9.10% (3 years and under) |
| Corporate quick-service restaurants | 5.00% (20+ years) | 6.85% (under 10 years) |
A short remaining term is cheaper for a reason. When the lease ends, the tenant can renew, ask for lower rent, or leave. If it leaves, your income drops to zero, and the taxes, insurance and upkeep the tenant was paying become yours. A building designed around one brand, like a drive-through restaurant or a bank branch, may need expensive work before the next tenant moves in.
Before you buy, check:
- Who signed the lease: the parent company, a subsidiary or a franchisee. Ask who guarantees payment and what the guarantee covers.
- The tenant’s public financial statements and credit rating, if it has one.
- The rent schedule, renewal options and what rent each option sets.
- Any early termination rights, co-tenancy clauses or “go dark” rights that let the tenant stop operating while it keeps paying rent.
- Whether the store’s sales and the local area would make the tenant want to stay.
Financing and 1031 exchange decisions
A loan can lower your cash return when its debt service is expensive relative to the property’s income. Test the actual loan terms alongside the lease. Include amortization, lender fees, required reserves and any balloon payment rather than comparing the headline interest rate with the cap rate alone.
Here is an illustration using the $2,000,000 property and an assumed loan, not a lender quote. You put down $800,000 and borrow $1,200,000 at 6.75% over 25 years, with monthly payments. Annual debt service is about $99,500. From $130,000 of NOI, that leaves about $30,500 before tax, closing costs and reserves. The cash-on-cash return is roughly 3.8% on the down payment. Principal paydown builds equity, but it does not increase the cash available to spend.
Ask lenders how they treat the years remaining on the lease and the tenant’s credit. A loan that matures after the tenant’s lease may leave you refinancing an empty building. Our guide to investment property financing options compares ways to fund a purchase.
Using 1031 exchange proceeds
If you are selling a rental and want fewer management duties, an STNL may be a replacement-property candidate. A qualifying like-kind exchange under Internal Revenue Code section 1031 can defer recognition of gain. Since 2018, the rule applies to real property held for business or investment, not property held primarily for sale. The IRS treats real properties as generally like-kind, though U.S. and foreign property are not like-kind to each other.
The timing rules are strict. The IRS instructions for Form 8824 say you must identify replacement property within 45 days after you transfer the property you give up. You must receive it within 180 days, or by your tax return’s due date including extensions, whichever comes first. Receiving cash or other non-like-kind property can make part of the gain taxable. Exchanges with related parties have their own rules.
That short identification window can push you toward a readily available listing rather than the right investment. Line up candidates and a qualified intermediary before your sale closes. Our article on using a 1031 exchange to defer tax on a rental sale explains the process. Your tax adviser should confirm whether the property and transaction qualify.
What the landlord still owns and manages
An STNL can reduce your daily management work, but the lease determines how much. Check who handles the roof, structure, paving and building systems. Even where the tenant carries those costs, someone should track tax payments, insurance renewals and repair obligations. A missed tax bill or lapsed policy can create trouble well before resale.
Compared with a small multifamily property, an STNL concentrates rental income in one tenant. If that tenant leaves, all rental income can stop at once. An apartment building spreads rent across several households, although turnover and repairs create more ongoing work. Our guide to investing in multifamily property covers that comparison.
Before signing a purchase agreement, request a lease review, building inspection and a budget for a vacancy. Estimate the taxes, insurance, security and maintenance you would pay without the tenant. Check whether another business could use the building without major alterations, and whether its likely rent would support your costs.
Utopia’s commercial property management page explains support for commercial owners. For a storefront, review our retail management services and discuss the lease-specific duties with the team. Find a nearby team through our property management offices.
Frequently asked questions
What does STNL mean?
STNL stands for single-tenant net lease. It is a property leased to one tenant under a lease that makes the tenant pay some or all of the taxes, insurance and maintenance on top of rent. The exact split depends on whether the lease is single net, double net, triple net or absolute net.
How do I find single-tenant net lease properties?
Look through commercial brokers and listing platforms, then compare similar property types, tenants and remaining lease terms. Before making an offer, request the full lease and amendments, the rent schedule, details of any guarantor and available tenant financial information. A listing’s cap rate alone is not enough to assess the deal.
Are net lease cap rates going up in 2026?
Yes. The Boulder Group reported an overall asking cap rate of 6.92% in Q3 2026, up from 6.82% in Q2. That was the second quarterly increase in a row. Retail reached 6.69%, office 8.00% and industrial 7.28%. These are asking figures, not achieved investment returns.
Sources
Checked October 8, 2026. Cap rates are national median asking figures from one research firm; closed prices and local markets vary.
- The Boulder Group: Net Lease Market Report, Q3 2026 — national asking cap rates, property counts, asking-versus-closed spreads, and differences by tenant and remaining lease term.
- The Boulder Group: Single Tenant Net Lease Cap Rates Rise in Q3 2026 — release summary confirming the 6.92% overall rate and 4.50% ground lease cap rates.
- Northmarq: Types of net lease — general expense structures, tenant reimbursement under NNN leases and retained roof or structural duties under NN leases.
- IRS: Like-Kind Exchanges – Real Estate Tax Tips — Section 1031 limited to real property since 2018; real properties generally like-kind; boot is taxable.
- IRS: Instructions for Form 8824 (2025) — 45-day identification and 180-day receipt deadlines; related-party rules.
This is general information, not legal or tax advice. Talk to a qualified tax adviser before you start an exchange.
