Single-Tenant Net Lease Investment in Miami
Miami's single-tenant net lease market trades tight. Investment-grade tenants price at 4.5% to 5.5% caps, with credit-grade regional operators pushing 6% to 7%. The 1031 money keeps flowing south, and international buyers still see Miami as safe harbor. Your biggest challenge isn't finding buyers — it's pricing properties that pencil for sellers who bought at today's compressed rates five years from now.
Market Context
Cap Rate Range
4.5% to 7.2% depending on tenant credit and lease term. Investment grade nationals trading at 4.5% to 5.5%, regional credits at 5.5% to 6.5%, local operators pushing 6.5% to 7.2%
Current Vacancy
Single-tenant by definition is occupied, but shadow inventory exists. Roughly 15% of marketed properties have tenants on short-term holdovers or month-to-month
Rent Trend
Annual escalations averaging 2.5% to 3% in new deals, up from 1.5% to 2% pre-2022. Flat rent deals almost extinct except for premium locations with percentage rent kickers
Absorption
Properties with 10+ year terms and annual bumps move in 45-90 days. Shorter-term or flat rent deals sit 6+ months
Price Per Unit Trend
Price per square foot varies wildly by tenant and location. CVS/Walgreens at $400-600/SF, QSR drive-thrus at $800-1,200/SF, auto service at $200-350/SF
Transaction Volume
Down 25% from 2021-2022 peak but still active. Under $5M deals move fastest, $10M+ properties face financing headwinds and longer marketing periods
Submarket Analysis
Coral Gables
4.2% to 5.8% capVacancy
Occupied by definition
Avg Rent (1BR)
N/A - Commercial NNN
Prime credit tenants only. Rent escalations hold at 2.5-3% annually. Limited supply keeps pricing aggressive
OM Tip
Emphasize walkability scores, household income demographics, and proximity to University of Miami
Aventura/North Miami Beach
4.8% to 6.2% capVacancy
Occupied by definition
Avg Rent (1BR)
N/A - Commercial NNN
Strong demographics support retail. New development pressure on older single-tenant sites
OM Tip
Highlight international shopper draw and condo density. Include population growth projections
Kendall/Pinecrest
5.2% to 6.8% capVacancy
Occupied by definition
Avg Rent (1BR)
N/A - Commercial NNN
Family-oriented retail performs well. Drive-thru concepts especially strong
OM Tip
Focus on household formation and school district quality. Traffic counts matter more than walk scores
Doral/West Miami
5.5% to 7.0% capVacancy
Occupied by definition
Avg Rent (1BR)
N/A - Commercial NNN
Business district growth supports service retail. Industrial conversion pressure on fringe locations
OM Tip
Emphasize daytime employee population and Latin American business connections
Homestead/South Dade
6.5% to 7.5% capVacancy
Occupied by definition
Avg Rent (1BR)
N/A - Commercial NNN
Value-oriented retail. Longer marketing times but stable rent collections once leased
OM Tip
Stress population growth trajectory and lack of competing retail supply. Include hurricane preparation details
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What Your OM Needs to Address
Full lease abstract with renewal options
Don't summarize the lease terms — buyers want to see assignment clauses, dark store provisions, and percentage rent triggers line by line
Data to Include
Complete rent escalation schedule, renewal option rent determination method, guarantor financial strength, assignment and subletting restrictions
Tenant sales performance and market penetration
Sales per square foot tells the real story about location quality and tenant commitment to the site long-term
Data to Include
Three years of tenant sales if available, market area competition analysis, drive-time demographics, traffic count studies
Hurricane and flood insurance details
Post-2022 insurance costs can kill deals. Buyers need current policy terms and renewal projections built into underwriting
Data to Include
Current insurance costs broken down by coverage type, claims history, flood zone designation, wind mitigation features
Dark store and co-tenancy provisions
These clauses can destroy cash flow overnight. Buyers will dig into every scenario where rent gets reduced or eliminated
Data to Include
Exact language of go-dark clauses, co-tenancy requirements if in shopping center, rent reduction triggers and amounts
Market rent analysis and reversion projections
What happens at lease expiration? Current market rents vs. in-place rents determine terminal value assumptions
Data to Include
Comparable lease rates for similar tenants, rent escalation vs. market rent growth analysis, renewal probability assessment
Development rights and land value
Single-tenant sites often have redevelopment potential. Zoning and highest-and-best-use analysis can justify pricing
Data to Include
Current zoning and permitted uses, recent land sales comps, development feasibility study if land value exceeds income approach
Investment Outlook
Short Term
Cap rates likely stay compressed through 2026 as 1031 money chases limited supply. Investment-grade tenants with 10+ year terms will continue trading at historically tight spreads to treasuries.
Medium Term
2027-2029 could see modest cap rate expansion if interest rates normalize and new supply increases. Tenant credit quality becomes more important as economic cycle matures. Regional operators face more scrutiny.
Long Term
Miami population growth supports long-term retail demand, but format evolution continues. Properties with redevelopment rights or adaptive reuse potential outperform single-use retail boxes. Climate resilience becomes a bigger factor in valuation.
Buyer Profile
1031 exchangers dominate sub-$10M market. High net worth individuals seeking tax-deferred income. Some institutional interest in portfolio acquisitions of investment-grade tenants. International buyers focus on trophy assets in prime submarkets.
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