For many executives, athletes, and families coming out of a business sale or a concentrated stock position, a single-tenant net lease property is the first commercial asset they own outright. The appeal is clear: one tenant, a long lease, rent deposited monthly, and most of the operating expenses carried by the tenant. Offering memorandums lead with two things, the cap rate and the tenant's name. Both matter. Neither tells you what you are actually buying.
What you own is a lease and a piece of Texas real estate. The lease decides how secure the income is. The real estate decides what the asset is worth when the lease ends. This is how we work through both for private clients before anyone signs a letter of intent.
Where pricing sits
The Boulder Group's second-quarter 2026 net lease research report, as summarized by MBA NewsLink on July 7, 2026, put the average single-tenant net lease cap rate at 6.82 percent, up two basis points. Retail rose five basis points to 6.60 percent, industrial rose ten basis points to 7.25 percent, and office held at 7.90 percent.
Two other points in that report matter more for a buyer. Supply rose 12.5 percent from the prior quarter to roughly 5,800 properties on the market. And high-quality assets with investment-grade tenants and long-term leases made up less than 10 percent of retail supply. Jimmy Goodman, a partner at The Boulder Group, said that "high-quality, investment-grade net lease assets with long lease terms remain scarce." The report also noted that net lease cap rates do not move in lockstep with interest rates, and that tenant credit, lease term, and property fundamentals all drive pricing.
Put plainly: there is more to choose from, and very little of it is the kind of asset that made net lease attractive in the first place. The work is telling them apart.
Read the lease before the credit rating
A recognizable brand on the building is not the same as that brand's balance sheet behind the rent. The lease is the asset, and these are the provisions we read first:
- Who signs and who guarantees. A corporate lease backed by the parent company is a different investment from a lease signed by a franchisee or a single-store subsidiary. The Boulder data shows the market prices that difference: corporate quick-service restaurants averaged a 5.85 percent cap rate in the second quarter, franchisee-operated ones 6.85 percent.
- Remaining term, not original term. A 15-year lease signed nine years ago is a six-year lease. Renewal options belong to the tenant, not to you.
- What net actually means. An absolute net lease leaves the owner with almost nothing to maintain. A double net lease may leave the roof, structure, and parking lot with the landlord. In Texas, hail and heat make those real line items, not footnotes.
- Rent increases. Flat rent over a long term loses purchasing power every year. Scheduled increases, and how often they occur, belong in the comparison between two otherwise similar properties.
- Go-dark and assignment rights. Many leases let the tenant stop operating while continuing to pay rent, or assign the lease to another operator. Either can change the property's value long before the lease expires.
- Rights of first refusal. A tenant's right to match any offer can thin the buyer pool when you sell.
Underwrite the real estate as if the tenant leaves
Every lease ends. The question that protects capital is what happens on that day. What would another user pay to occupy this building? What would it cost to re-tenant, including downtime, leasing commissions, and improvements? Does the site stand on its own, with access, visibility, parking, and zoning that suit more than one type of user?
Compare the in-place rent to what comparable space leases for today. If the tenant is paying well above market, the purchase price capitalizes rent that will not survive a renewal negotiation. A property with modest, market-level rent on a strong corner is often the safer long-term hold than a higher-yielding building on a weak site.
The cap rate prices the lease. The site prices everything after it. Buy the asset you would still want if the tenant handed back the keys.
Expenses, taxes, and insurance
Even when the tenant reimburses property taxes and insurance, the owner should know who is responsible for protesting the appraisal district's value each year and who carries the property policy, with what deductibles for wind and hail. Rising occupancy costs land on the tenant first, and they eventually show up in the tenant's decision whether to renew.
Closing and the exit
Before closing, request a tenant estoppel certificate confirming the rent, the term, and that neither party is in default. If you are financing the purchase, the lender will typically require one along with a subordination, non-disturbance, and attornment agreement, so start those early. Decide in advance how title will be held; many private clients use a dedicated entity for liability and privacy reasons, and that choice is easier to make before closing than after.
Then think about the sale you have not planned yet. A ten-year lease bought today is a five-year lease to the next buyer in five years, and the buyer pool narrows as remaining term shortens. The scarcity Goodman described cuts both ways: it supports pricing on the best assets today and rewards owners who sell while the lease still has length. As John Feeney, a senior vice president at The Boulder Group, put it in the same report, "when the credit is strong and the lease structure is right, deals are getting done."
A private conversation first
If you are weighing a net lease purchase in Texas, or questioning whether one you already own still fits your plan, we can review the lease and the real estate with you quietly and without obligation. Schedule a confidential 30-minute strategy call at eregtx.com.