The triple net lease property market is undergoing a notable shift in investor demographics, according to Ayson Shammami, Managing Partner at APEX Commercial Real Estate Advisors. In a recent interview, Shammami detailed how the typical buyer profile for income-producing commercial properties has changed, challenging long-held assumptions about who participates in this asset class.
Market Overview
Shammami, who has completed more than 350 transactions and was the top agent at his previous firm in 2023, described a significant departure from the traditional makeup of triple net lease investors. “Real estate used to be a business where people could create a lot of value and multiply equity. It was a very niche business, and there weren’t many people in it,” he said.
Over the past seven years, Shammami has observed that seasoned real estate professionals—previously the core buyers of triple net assets—are now stepping back from this sector. Instead, a new wave of investors, often with no deep real estate background, is entering the market.
Key Investment Factors
Shammami identified several critical trends shaping the current landscape:
Investor Profile Evolution: “Since I’ve been in the business, I’ve noticed that those real estate professionals who created massive wealth do not buy real estate anymore, and I don’t think they will again, because the opportunities for strong returns have become much more limited.”
Return Expectations: “People are buying properties and essentially parking their capital to collect six to eight percent returns for three, four, five years.”
Risk Assessment: “Investors now see this as a low-risk investment that provides a low return on their capital.”
Emerging Opportunities
The influx of non-traditional investors is being driven by increased access to information about triple net leases. Shammami noted that more professionals from outside the real estate sector, such as doctors and other high-income earners, are seeking passive investment alternatives. “Over the last seven years, there’s a lot more information out there about triple net leases. People who never knew you could buy a standalone property leased to a national tenant are now aware of it,” he explained.
This broader awareness has expanded the pool of potential investors, drawing in those who previously focused on stocks or other assets.
Risk Assessment
Shammami pointed out that for new entrants, understanding credit risk is the most significant challenge. “The biggest thing I find myself educating them on is the credit risk and the profile behind the guarantee of the lease they’re buying,” he said. He stressed that lease terms can vary widely, even with the same tenant, and that negotiation outcomes can significantly affect risk. “No lease is created equal. You could have 500 leases with the same tenant, and one landlord may have had a slip in their negotiations.”
Return Expectations
Reflecting on the evolution in investment strategy, Shammami emphasized that the days of rapid equity growth are largely over. “If you take someone who bought real estate 10 or 20 years ago, they could invest a million dollars and that could quickly be worth two or three times as much in equity,” he said. Today, he notes, returns are typically capped at “15 to 20 percent in the best-case scenario, over a short-term hold.”
This shift highlights a new reality for triple net lease investing: lower risk and lower returns, but greater accessibility for a broader range of investors.
