Sale-Leaseback Deals Slide Even as STNL Investment Grows

The return to more predictable net lease acquisitions is exposing a selective environment, with fewer sale-leaseback deals penciling out. User-owned divestment clocked in at $1.3 billion during the first half of 2026, marking a steep decline of 67.6 percent year-over-year, according to Newmark data.

Meanwhile, overall net lease transactions totaled $13.8 billion in the second quarter alone, the largest second-quarter figure since 2022, a recent Newmark national report on single-tenant net lease shows. This was across office, industrial and retail combined.

“Although overall net lease sales volume has generally been increasing, the 2026 decline in sale-leaseback volume is mainly attributed to a smaller number of deals being inked, rather than a drop in deal size,” Newmark Head of Southeast Research Ching-Ting Wang told Commercial Property Executive.

Returns not rising to desirable levels and less-than-ideal credit criteria fueled part of investor reluctance, according to Wang. Capital flew toward traditional net lease purchases instead.

With more capital in the net lease sector at large, the share of sale-leasebacks nearly halved during the second quarter compared to the historical average since 2019, Wang underlined.

“For middle-market companies, which typically use sale-leasebacks to unlock capital for expansion, the pullback suggests they are either turning to more conventional financing sources or deferring monetization of owned real estate until pricing and terms improve,” she reasoned.

The effects of selectivity beyond sale-leaseback deals

The same selectivity that limited sale-leaseback deals is in line with the structural shift of the entire net lease sector as asset type preferences realigned to match investor needs.

“The bigger structural story of the past decade is the rotation from office into industrial: The industrial share of national net lease sales volume has grown from roughly a third to 61.5 percent today, while the office share has fallen from nearly 40 percent to just 13.2 percent over the same period,” Newmark Senior Research Analyst Kirsten Kempf told CPE.

Notably, net lease single-tenant retail’s share of the investment volume remained exceptionally stable, ranging between 24 and 25 percent during the same period, consistently drawing investors while office and industrial shifted places, Kempf continued.

Overall market transaction activity rebounds

The growth of cap rates across the three sectors outpaced the 10-year Treasury increase rate, widening spreads that aided in reigniting deal flow, Wang added. Sidelined investors that are waiting for cap rates to adjust are beginning to observe their desired risk-adjusted returns, potentially supporting consistent activity throughout the broader market.

Kempf noted that during the 12-month period trailing June, “all three major property types posted higher sales volume than the prior four-quarter period, with office actually leading at 23.2 percent growth, followed by industrial at 17.1 percent and retail at 16.3 percent.”

She concluded that demand continues to gravitate toward “stable income, strong tenant credit, lease quality and disciplined pricing,” and that “improvement is occurring across the market, not in a single asset class.”

The third quarter is showing signs of continued investor confidence, with CBRE Investment Management’s acquisition of Cerberus Capital Management’s Tenet Equity net lease platform for $1.6 billion. Notably, Tenet Equity mainly operated through sale-leaseback deals by aiding middle-market companies with capital solutions that monetized their real estate holdings without losing operational control.