Not all retail tenants are created equal, and in the triple net lease world, that distinction carries real financial weight. The strength of your tenant determines the reliability of your rent check, the security of your lease, and the long-term value of your asset.
In 2026, the retail landscape has sorted itself into clear winners and sectors that warrant a second look. At Westwood, our role is to help you see both with clear eyes, so you can build a portfolio that stands on a solid foundation.
The NNN Sectors on Solid Footing
Discount Retail: Dollar General
Few NNN tenants offer the combination of scale and forward momentum that Dollar General presents today. As of late 2025, the company operated over 20,900 locations across the United States. For fiscal year 2026, Dollar General has committed to 450 new U.S. store openings and 4,250 store remodels, with a focus on a larger 8,500-square-foot format in rural and underserved markets.
The financial results support the confidence. Net sales for Q3 2025 reached $10.6 billion, a 4.6% increase year over year. Same-store sales rose 2.5%, driven by an increase in customer traffic. CEO Todd Vasos noted disproportionate growth from higher-income households, and the company raised its full-year EPS guidance, a strong signal of management conviction.
With approximately 80% of its store base in towns of 20,000 people or fewer, Dollar General occupies a structural position in rural
America that competitors find difficult to replicate.
For NNN investors, this kind of systematic real estate investment from a major credit tenant is the asset class at its best.
Automotive Aftermarket: O’Reilly Auto Parts and Advance Auto Parts
The U.S. vehicle fleet continues to be one of the most durable structural tailwinds in retail. Americans delayed new vehicle purchases during the high-rate environment, and that behavior has sustained demand for aftermarket parts and service well into 2026.
O’Reilly Auto Parts delivered full-year 2025 revenue of $17.78 billion, a 6% increase over 2024, with a comparable store sales result of 4.7% at the high end of its revised guidance range. The company opened 207 net new stores in 2025, including a new state-of-the-art distribution center in Virginia, and has plans for around 230 new locations in 2026.
Advance Auto Parts took a different path. After the consolidation of over 700 underperforming stores, the company refocused its footprint and returned to a growth posture, with 30 new locations planned for 2025 and a target of 100 or more additional stores through 2027.
O’Reilly has delivered 32 consecutive years of record revenue growth, fueled by its store expansion strategy, robust distribution network, and a strong focus on customer service. Both companies reflect a sector with durable, recession-resilient demand and a clear commitment to the physical store as a long-term retail channel.
Healthcare Services: Heartland Dental
Healthcare-anchored NNN properties have earned a reputation for resilience, and Heartland Dental’s 2025 results underscore why. The nation’s leading dental support organization ended 2025 with more than 1,900 supported practices across 39 states and the District of Columbia, with supported practices completing 11.5 million patient visits for the year.
The company exceeded its ambitious goals, collaborating to open 75 de novo practices, completing 19 relocations, expanding 27 existing supported practices, and adding 33 more through strategic affiliations. Heartland Dental’s acquisition of Smile Design Dentistry brought an additional 60 world-class supported practices into the network.
The fundamentals here are compelling from a real estate standpoint: essential healthcare services, a proven corporate growth model, and a tenant with a demonstrated capacity for scale in high-growth, high-need markets.
The Sectors That Warrant Due Diligence
The following sectors are not uniformly distressed, but they surface important questions for NNN investors about tenant financial health, unit-level economics, and long-term lease security.
Quick-Service Restaurants: Wendy’s and Pizza Hut
Wendy’s closed 28 U.S. restaurants in Q4 2025 and expects to shutter 298 to 358 additional locations in the first half of 2026, the equivalent of 5% to 6% of its domestic footprint. The closures are part of a turnaround plan called Project Fresh, designed to revitalize the brand and accelerate profitability. U.S. same-restaurant sales fell 11.3% in Q4 2025 and 5.6% for the full year.
Pizza Hut, under parent company Yum Brands, has announced the closure of 250 underperforming U.S. stores in the first half of 2026 as part of a program to accelerate the brand for the long term.
This does not disqualify quick-service restaurant properties from a NNN portfolio. Tenant quality, lease structure, franchisee financial strength, and location fundamentals all remain critical variables. A corporate-guaranteed lease on a well-located QSR asset tells a very different story than a franchisee-backed lease in a secondary market with declining unit economics. The key is knowing the difference, and that is where a skilled buyer’s advisor earns their value.
Specialty Retail: Party City
Party City filed for Chapter 11 bankruptcy protection in December 2024 and announced the closure of its entire fleet of roughly 700 stores. The company struggled to manage a heavy debt load inherited from private equity ownership, and failed to make the technology and customer experience investments necessary to compete against e-commerce and mass merchants like Amazon and Walmart.
For NNN investors, the Party City story reinforces the value of credit analysis and category durability before acquisition. A thoughtful due diligence process, one that includes an honest evaluation of a tenant’s competitive position and debt structure, is what protects investors from this kind of outcome. Our team walks through exactly this kind of due diligence approach in this real client case study.
Childcare Centers
The childcare sector faces a structural funding challenge. Pandemic-era federal subsidies that kept many providers afloat have largely expired, and most states have not replaced them with support of comparable scale. The result has been a wave of closures across the country.
Guidepost Montessori has seen multiple site closures in 2025, with leadership acknowledging overextension and an inability to meet rent obligations in several markets. The end of federal and state funding has been a primary driver of closures nationwide, with inflation also pushing up costs like rent and insurance while labor shortages have made staffing more expensive.
The underlying demand for quality childcare is not in question. What is in question is whether individual operators can sustain profitable unit economics without government support. Investors who hold childcare NNN properties, or who consider them, should evaluate each tenant’s subsidy dependencies, regional demographics, enrollment trajectory, and balance sheet with care. For a closer look at how we approach early education properties, see our childcare center case study.
What This Means for Your Portfolio
The 2026 NNN landscape rewards investors who do the deep, analytical work. Tenant health, sector trends, lease structure, and location fundamentals are not abstract concerns. These are the variables that determine whether your passive income stream holds or breaks under pressure.
The clearest signal from today’s data: sectors with essential, non-discretionary demand, backed by well-capitalized operators with disciplined real estate strategies, continue to outperform. Discount retail, automotive aftermarket, and essential healthcare are three of those sectors.
The more nuanced signal: not every challenged tenant is a poor investment, and not every growth sector is a guaranteed win. The quality of due diligence is what separates smart NNN acquisitions from costly lessons. Our Q3 2025 market analysis and our buyer’s market overview both cover the financing environment and cap rate dynamics that shape every acquisition decision right now.
At Westwood, we help our clients navigate this landscape with a structured, research-based process. Our role is not to steer you away from sectors with headwinds, but to help you understand what you are acquiring, at what price, and on what terms, so the investment serves your long-term goals.
Ready to evaluate NNN properties with the right guidance? The Westwood team represents buyers across the country, with no-obligation consultations available at 314-997-5227.
