Not all NNN tenants are equal. Some have decades-long track records of paying rent reliably. Others look strong on paper but carry hidden risks. As an income investor — especially one buying NNN as a 1031 exchange destination or for retirement income — picking the right tenants is more important than picking the right cap rate.

This lesson walks through the major NNN tenant categories, the leading brands in each, and what to look for (and avoid) in each one. Florida-specific considerations are noted throughout.

How to think about tenant selection

Before diving into specific brands, frame your decision-making:

Durability — will this tenant exist in 15 years? In 25?
Rent affordability — is this site profitable enough that the tenant won't push back at renewal?
Re-leasability — if this tenant leaves, can the building serve another use?
Industry resilience — is this category vulnerable to Amazon, automation, or demographic shifts?
Florida fit — does this brand do well in Florida specifically (population growth, hurricane exposure, retiree demand)?

Apply these five filters to every NNN tenant and the choices become clearer.

NNN tenant quick reference

A summary table before the deep dives — typical 2026 cap rates, S&P credit, and Florida fit:

| Tenant | Category | S&P Credit | Cap rate | Florida fit | |---|---|---|---|---| | Walgreens | Drug store | BBB | 5.5–6.5% | Strong | | CVS | Drug store | BBB | 5.5–6.5% | Excellent | | Dollar General | Dollar store | BBB+ | 6.0–7.0% | Strong (rural) | | Dollar Tree / Family Dollar | Dollar store | BBB- | 6.5–7.5% | Decent | | McDonald's (ground lease) | QSR | BBB+ | 5.0–5.75% | Excellent | | Chick-fil-A | QSR | Private | 4.5–5.5% | Very strong | | Starbucks | QSR | BBB+ | 5.0–6.0% | Strong | | AutoZone | Auto parts | BBB | 6.0–6.75% | Strong | | O'Reilly Auto Parts | Auto parts | BBB | 6.0–6.75% | Strong | | Advance Auto Parts | Auto parts | BB- | 7.0–8.0% | Caution | | 7-Eleven | C-store | A | 5.5–6.5% | Strong | | Wawa | C-store | Private | 5.0–6.0% | Very strong | | RaceTrac | C-store | Private | 5.5–6.5% | Strong | | FedEx | Industrial | BBB | 5.5–7.0% | Strong | | Amazon | Industrial | AA | 5.5–6.5% | Very strong | | Major banks (Chase, BoA, Wells, Truist) | Bank | A / A- | 5.5–6.5% | Mixed | | DaVita / Fresenius | Medical | Varies | 6.0–7.5% | Very strong | | Tractor Supply | Specialty | BBB | 6.0–7.0% | Strong (rural/exurban) |

Drug stores

Drug stores (pharmacies) are the original NNN darling. Walgreens and CVS have built thousands of freestanding locations over the past 40 years specifically designed for NNN sale-leasebacks. They are the most heavily traded NNN category.

Walgreens (Walgreens Boots Alliance)

Credit: BBB (S&P)
Typical cap rate: 5.5-6.5% for long-remaining-term IG locations
Lease structure: Typically 25-year original term with 8 × 5-year options (total 65 years possible)
Rent structure: Often flat through primary term with step-ups at options
Maintenance: Generally absolute NNN
Building: 13,000-14,500 SF freestanding, drive-thru pharmacy, prominent corner locations

The good: Walgreens leases are clean, well-documented, and the corporate guaranty is rock solid. The buildings are professionally designed and well-maintained.

The watch: Walgreens has been closing underperforming stores. Closures don't end the lease (they continue paying rent), but a closed Walgreens with a long remaining term can be uncomfortable for buyers. Always check whether a specific location is on a "preferred" list or has been flagged for closure.

Florida fit: Strong. Walgreens has a major Florida footprint, especially in retiree-heavy areas. Their drive-thru model fits Florida demographics well.

CVS Health

Credit: BBB (S&P)
Typical cap rate: 5.5-6.5% for long-remaining-term IG locations
Lease structure: Similar to Walgreens — 25-year original terms with multiple options
Maintenance: Generally absolute NNN

The good: CVS has expanded into healthcare (MinuteClinic, HealthHubs), giving the brand additional revenue streams beyond pharmacy. This diversification supports long-term durability.

The watch: Same closure pressure as Walgreens, especially in areas with overlapping locations.

Florida fit: Excellent — CVS dominates many Florida markets.

Drug store risks to consider

The drug store industry faces structural pressures:

Pharmacy benefit manager (PBM) margin compression
Amazon Pharmacy and mail-order
Growing pharmacy deserts in some markets
Competition from grocery and big-box pharmacies (Walmart, Costco, Publix)

Drug stores remain solid NNN investments, but the era of "buy any Walgreens and sleep forever" is over. Pick locations with strong demographics, prime corners, and recent lease activity.

Dollar stores

Dollar stores have become one of the most active NNN categories. Dollar General alone has 19,000+ stores and continues to expand aggressively.

Dollar General

Credit: BBB+ (S&P) — among the strongest in NNN
Typical cap rate: 6.0-7.0%
Lease structure: 15-year original with 4-5 options of 5 years
Rent: Flat primary term with 10% step-ups at each option period
Maintenance: Generally absolute NNN
Building: 9,100-10,500 SF, simple metal building, rural and small-town locations

The good: Dollar General is recession-resistant. Their model targets low-income communities that are underserved by traditional retail. They have been one of the most reliable NNN tenants for 20+ years.

The watch: Aggressive expansion has led to some site cannibalization. Recent slower-than-expected store performance has pressured the stock and forced strategy changes. Some buildings are in such rural locations that the underlying real estate has minimal alternative use value.

Florida fit: Strong in rural and small-town Florida. Polk, Highlands, Hardee, DeSoto, Glades, and other inland counties have strong Dollar General presence.

Dollar Tree / Family Dollar

Credit: BBB- (S&P) — bottom of investment grade
Typical cap rate: 6.5-7.5%
Lease structure: 10-15 year original terms typically
Building: 8,000-10,000 SF strip or freestanding

The good: Two-brand portfolio (Dollar Tree and Family Dollar) gives flexibility.

The watch: Family Dollar has been struggling for years. The recent strategic review and store closures highlight stress in that brand. Dollar Tree itself is healthier but trades at slightly wider caps than Dollar General.

Florida fit: Decent — Family Dollar has strong urban Florida presence but faces more competition from Dollar General in rural areas.

Quick service restaurants (QSR)

QSR is one of the most desirable NNN categories because of:

Strong unit economics
Long lease terms
Drive-thru models that resist e-commerce
Strong brand recognition supporting re-leasing if needed

McDonald's

Credit: BBB+ (S&P)
Typical cap rate: 5.0-5.75% for corporate-guaranteed; 5.75-6.5% for ground leases
Lease structure: Most McDonald's are GROUND LEASES (tenant owns and maintains the building, landlord owns the land)
Maintenance: Tenant handles everything in a ground lease
Building: 4,000-5,000 SF restaurant with drive-thru, 1+ acre site

Important: McDonald's primarily uses ground leases. As a NNN investor, you're buying the land underneath the building. The building itself is owned by the tenant and reverts to you at lease end.

The good: McDonald's ground leases are about as bond-like as CRE gets. McDonald's Corporation (the corporate parent) often guarantees franchise sites. The brand has paid every lease for 70+ years.

The watch: Ground lease structure means if the building has 30 years left, you're locked into a long, slow appreciation pattern. Cap rates are aggressive (5.0-5.5%) leaving little margin for error.

Florida fit: Excellent. McDonald's dominates Florida with strong corporate-guaranteed sites in growing markets.

Chick-fil-A

Credit: Private (Cathy family-owned)
Typical cap rate: 4.5-5.5% — the lowest in NNN
Lease structure: Usually NNN ground lease, often with corporate guaranty
Building: ~5,000 SF with drive-thru

The good: Chick-fil-A has the highest unit volumes in QSR by a wide margin. Their per-store sales averages $9.0M+ vs ~$3.6M for McDonald's. This creates extraordinary tenant strength.

The watch: Private company with no public credit rating. Buyers pay premium prices on faith in the brand's continued strength. Sites are rare on the market — most are held long-term.

Florida fit: Very strong — Chick-fil-A has aggressive Florida expansion.

Starbucks

Credit: BBB+ (S&P)
Typical cap rate: 5.0-6.0%
Lease structure: 10-15 year primary with options, often NNN drive-thru
Building: 2,200-2,500 SF, drive-thru focused for newer builds

The good: Strong corporate credit, aggressive new unit growth, drive-thru models that work well.

The watch: Recent same-store sales pressure. Some older urban sit-down locations are weaker than newer drive-thru builds.

Florida fit: Strong, especially in growing suburban corridors.

Other QSR brands

Chipotle — BBB+, strong unit economics, growing footprint
Taco Bell — BBB-, consistent performer, strong franchisee networks
KFC, Pizza Hut, Wendy's — varies by franchisee credit; typically franchise-guaranteed only
Burger King — variable; depends on franchisee
Dunkin' — variable; franchisee-led model with some weakness
Raising Cane's, In-N-Out — private, rare on the market, premium pricing when available

Auto parts retail

Auto parts is a structurally sound NNN category because cars need maintenance regardless of EVs, online shopping, or economic cycles.

AutoZone

Credit: BBB (S&P)
Typical cap rate: 6.0-6.75%
Lease structure: 15-20 year original terms with options
Building: 7,000-8,000 SF freestanding
Maintenance: Generally absolute NNN

The good: AutoZone has been one of the most consistent NNN performers for 20+ years. Buildings are simple and re-leasable.

O'Reilly Auto Parts

Credit: BBB (S&P)
Typical cap rate: 6.0-6.75%
Lease structure: Similar to AutoZone

The good: Slightly more aggressive growth than AutoZone in recent years. Strong Florida presence.

Florida fit: Both AutoZone and O'Reilly do well in Florida — large vehicle population, lots of older cars in service, retirees doing their own maintenance.

Advance Auto Parts

Credit: BB- (S&P) — below investment grade
Typical cap rate: 7.0-8.0% (significantly wider than AutoZone/O'Reilly)

The watch: Advance has been struggling for years. The credit rating reflects real concerns. Trade carefully.

Convenience and gas

C-stores combine retail, fuel, and food sales — increasingly food-focused as a margin driver.

7-Eleven

Credit: A (parent: Seven & i Holdings, Japan)
Typical cap rate: 5.5-6.5%
Lease structure: 15-20 year primary
Building: 3,000-4,500 SF with fuel canopy

The good: Strong corporate credit, global brand, recent expansion through Speedway acquisition.

Florida fit: Strong — 7-Eleven has heavy Florida presence.

Wawa

Credit: Private (Wood family-owned)
Typical cap rate: 5.0-6.0%
Lease structure: Long-term NNN, often ground lease
Building: 6,000+ SF "destination" c-store with fresh food

The good: Wawa has cult-level customer loyalty and dominant position in Mid-Atlantic and growing Florida footprint. Per-store sales among the highest in c-stores.

The watch: Private company with no public rating. Premium pricing.

Florida fit: Very strong — Wawa has been aggressively expanding in Florida and is now a major presence.

RaceTrac

Credit: Private (Atlanta-based)
Typical cap rate: 5.5-6.5%
Building: Large c-stores, often 5,000+ SF with extensive fuel canopies

Florida fit: Strong — RaceTrac has major Florida presence.

Other c-store brands

Circle K (Couche-Tard) — BBB, strong global brand
Sheetz — private, premium brand
Buc-ee's — private, mega-c-stores; rare on market

Industrial / distribution

Industrial NNN has surged in popularity because of e-commerce growth and supply chain investment.

FedEx

Credit: BBB (S&P)
Typical cap rate: 5.5-7.0% depending on facility type
Lease structure: Typically 10-15 year primary
Buildings: Distribution facilities, ground hubs, package handling

The good: FedEx is essential infrastructure. The buildings are purpose-built but functional.

Amazon

Credit: AA (S&P)
Typical cap rate: 5.5-6.5%
Lease structure: Variable — newer facilities have shorter terms
Buildings: Last-mile delivery stations, sortation centers, fulfillment centers

The good: Best credit in industrial NNN. Strong long-term demand for last-mile space.

The watch: Amazon has been rationalizing its real estate footprint. Some leases have been terminated or renegotiated. Newer facilities are increasingly purpose-built and may have limited reuse value.

Florida fit: Very strong — Amazon has been building heavy Florida last-mile infrastructure.

Banks

Bank branches were once the gold standard of NNN. The category has weakened with digital banking but still trades.

Major bank brands

Chase / JPMorgan — A
Bank of America — A-
Wells Fargo — A
Truist — A-
Regions — BBB+

Typical cap rate: 5.5-6.5% for major banks, wider for regional

The watch: Bank branch closures are accelerating. A bank lease is only as good as the specific branch's profitability — profitable branches stay open, unprofitable ones close (though rent continues). Re-leasing a closed bank branch is hard because the buildings are purpose-built (drive-throughs, vaults, lobbies).

Florida fit: Mixed — established markets are oversaturated, growing markets are still adding branches.

Specialty and risk categories

Car washes

Typical cap rate: 6.5-8.0%
Tenants: ZIPS, Mister Car Wash, Take 5, regional brands
The watch: Many car washes are franchise-only with no corporate guaranty. The category has seen heavy private equity rollups, creating credit complexity. Good Florida fit (vehicle volume, sunny weather) but pick tenants carefully.

Daycare

Typical cap rate: 6.5-8.0%
Tenants: KinderCare, Goddard, La Petite, Primrose, regional operators
The watch: Specialty buildings hard to re-lease. Operator margins are thin. Pick locations in growing family neighborhoods.

Medical (urgent care, dialysis)

Typical cap rate: 6.0-7.5%
Tenants: DaVita, Fresenius, MedExpress, AFC Urgent Care
The good: Medical NNN benefits from aging demographics. DaVita/Fresenius dialysis have very long primary terms (typically 15+ years).
The watch: Medical reimbursement risk. Specific operator credit varies.
Florida fit: Very strong — aging population drives demand.

Tractor Supply

Credit: BBB
Typical cap rate: 6.0-7.0%
The good: Rural retail with strong unit economics and consistent growth.
Florida fit: Strong in rural and exurban Florida.

Tenants to approach with caution

These categories are not necessarily bad investments but require extra diligence:

Casual dining chains (Applebee's, Chili's, TGI Friday's) — high failure rate
Apparel retail (Old Navy, Gap, Bath & Body Works) — Amazon vulnerability
Big box electronics (Best Buy) — declining store base
Movie theaters (AMC, Regal) — pandemic damage and structural decline
Gyms (Planet Fitness, LA Fitness) — leverage and category turbulence
Department stores — declining for decades

You can buy NNN deals with these tenants, but expect wider cap rates and meaningful re-leasing risk.

Florida tenant fit summary

Brands that perform especially well in Florida specifically:

Drug stores (Walgreens, CVS) — match the retiree demographic
Dollar stores (Dollar General) — strong rural and small-town reach
QSR with drive-thru (McDonald's, Chick-fil-A, Starbucks, Chipotle) — Florida loves drive-thru
C-stores (Wawa, 7-Eleven, RaceTrac, Circle K) — high vehicle population
Tractor Supply — rural Florida growth
Medical/dialysis — aging demographics
Industrial last-mile (Amazon, FedEx) — port access and population growth

These are the tenants we see most frequently in Central Florida NNN deals.

What to take away

Tenant selection matters more than cap rate for long-term NNN holds
Drug stores and QSR are the gold standard but each has specific risks
Dollar General is the most prolific NNN tenant in rural and small-town markets
Investment grade tenants trade at the tightest cap rates and lowest risk
Florida-fit tenants combine strong national brands with growing population dynamics
Always verify the specific tenant entity (corporate vs franchise) and current credit rating
Avoid struggling categories (apparel, casual dining, electronics) unless the price is exceptional
Specialty buildings (banks, daycares, car washes) are hard to re-lease — credit must be extra strong
Match the tenant to your hold strategy: short hold = anyone reliable; long hold = essential services

Next lesson: how to source NNN deals — where the inventory comes from, how to access it, and how to find off-market opportunities.

The Best NNN Tenants and Brands for Income Investors