Episode 7 – Retail Recap: Retail Market Breakdown – Bonus Depreciation is Back
Why Pricing's Stuck, Buyers Are Warming Up, and Triple-Net Still Wins
In this episode, hosts Jeremy Mercer, Rob Franks, and Secure Net Lease’s Bob Moorhead dive into retail investment trends, zeroing in on cap rate stability, the renewed power of bonus depreciation, and the competitive dynamics reshaping retail deal making. T-Mobile’s Zach Spletter joins the conversation for added perspective from the tenant side.
Cap Rates Holding the Line
Despite market uncertainty, cap rates across major retail brands remain remarkably consistent from the prior month:
- Starbucks is holding steady with a 6% average list cap. Inventory is growing slightly, but investor appetite is flat due to shorter lease terms and landlord responsibilities.
- Chipotle’s average list cap is in the 5% range when looked at nationally, bolstered by its lease structure and the popularity of drive-thru-equipped locations.
- 7-Eleven cap rates vary, with newer truck stop-style builds reaching price points of $14M+. These larger formats are seeing increasing demand in growth states like Texas, Florida, Arizona and the Carolinas.
- Dutch Bros stands out for its 15-year, true triple-net deals offering simplicity and security that investors continue to favor.
Inventory volumes across these brands are stable, and pricing hasn’t meaningfully changed. Buyers remain selective with elevated interest rates and negative leverage concerns.
Bonus Depreciation Sparks Movement
One of the biggest catalysts in the market right now is the return of 100% bonus depreciation, signed into law on July 4th. The effect was almost immediate as deal activity picked up, especially for large C-store assets that qualify.
While it hasn’t translated to a wave of closings just yet, there’s been a noticeable uptick in offers, site visits, and investor engagement. For many 1031 buyers and private capital groups, the added tax benefit is helping offset the sting of higher debt costs.
On the Ground: Tenant & Leasing Insights
Zach Spletter of T-Mobile joins to share how the brand continues to evolve from small-town expansion to top-100 metro relocations and suburban infill. Their ideal footprint (2,800–3,500 SF) often targets outparcels, and they’re focusing more on optimization and co-tenancy strategy.
Conclusion
Cap rates are holding steady, but buyer behavior is shifting as bonus depreciation re-enters the equation. Combine that with consistent inventory and potential rate cuts, and the back half of the year should see increased activity.
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