When it comes to the ideal NNN (Triple Net) investment, a few key factors stand out: growth potential, stability, strategic location, long-term leases, and solid corporate backing. Dollar stores, particularly Dollar General, check all these boxes and continue to exceed market expectations. Let’s dive into why these stores offer a promising option for NNN investors.
Dollar Stores’ Impressive Growth & Stability
Dollar stores thrive in both strong and weak economies, making them a rare find in the commercial real estate world. Even when other retailers struggle, Dollar General not only maintains stability but also experiences continued growth.
For example, Dollar General has consistently increased sales at its existing stores while adding approximately 1,000 new locations annually. By the end of 2024, Dollar General anticipates net sales growth in the range of approximately 4.7% to 5.3% and fiscal 2024 same-store sales to rise 1% to 1.6%. This consistent growth in established stores underscores why dollar stores are seen as reliable, lower-risk NNN investments.
Dollar stores are also redefining retail grocery sales. Amid record-high inflation, dollar stores have become a fast-growing retail channel for food purchases, with an 89.7% increase between 2008 and 2020, according to the American Public Health Association. While the company isn’t considered a grocer, approximately 80% of Dollar General stores serve communities of 20,000 or fewer people, with many Americans, especially in rural areas, relying on the retailer for their basic, everyday and household essentials. The market dominance of dollar stores, particularly in rural and underserved areas, further solidifies their position as strong, stable investments.
Are There Too Many Dollar Stores?
As of November 2023, Dollar General operated 19,147 Dollar General, DG Market, DGX and pOpshelf stores across the United States, and Mi Súper Dollar General stores in Mexico. Despite the saturation, dollar stores continue to thrive and grow.
Part of their success lies in smart location strategies. By placing most stores 5-10 miles apart, they effectively serve communities without cannibalizing business from nearby locations. They also appeal to customers who prefer the convenience of quick, in-and-out shopping experiences, making dollar stores a favored option for everyday essentials.
Are Dollar Stores Truly Recession-Proof?
While no business is completely recession-proof, dollar stores come close. Historically, they have shown strong growth and resilience during economic downturns. As mid-market retailers like J.C. Penney, Kohl’s, and Macy’s lose customers, dollar stores are picking up the slack, appealing to value-conscious shoppers who seek affordable options.
In the event of a future recession, dollar stores are well-positioned to continue expanding and attracting new customers. For NNN investors, this stability, combined with a volatile stock market, makes dollar stores a smart, low-risk investment option.
Dollar Stores Meet Ideal NNN Lease Criteria
In addition to their strong performance, Dollar General offers two other key advantages for NNN investors: long-term leases and zero landlord responsibilities. Dollar General locations typically come with 15-year lease guarantees, providing a reliable income stream for investors. These stores are strategically placed in areas with solid demographics, offering excellent visibility and proximity to essential services like banks, pharmacies, and gas stations.
For NNN investors, dollar stores provide:
- Passive, guaranteed income from anywhere in the U.S.
- Preservation of equity with a reliable tenant.
- A tenant that is largely recession-resistant.
With dollar stores popping up across the country and continuing to attract more shoppers with their low prices, convenience, and wide selection, now is a great time to consider adding a dollar store NNN lease to your investment portfolio.
Ready to Invest in a Dollar Store NNN Lease?
If you’re looking for a stable, long-term investment with minimal risk, dollar stores could be the right fit for you. At Westwood Net Lease Advisors, we specialize in helping investors navigate the NNN lease market. Our experienced advisors are here to guide you through every step of the process, from property selection to closing.
Contact us today for a no-obligation consultation and discover why dollar store investments are a smart move for NNN investors. Call 314-997-5227.
Westwood Net Lease Advisors provides accurate and reliable information to the best of our ability but does not offer legal, tax, or financial advice. Please consult a professional for specific guidance.
