When investing in NNN (Triple Net Lease) properties, the quality of the tenant is a crucial factor in determining the stability and profitability of the investment. A good NNN tenant is one with a strong financial profile, a well-established market presence, and a business model that generates consistent demand. Tenants who provide essential services, exhibit recession resilience, and are backed by corporate guarantees are often ideal candidates. They offer reliable cash flow and lower risk, as the responsibility for property expenses such as taxes, insurance, and maintenance falls on the tenant, making the investment more predictable and hands-off for the owner.
NNN properties are a prime choice for investors seeking passive income because they offer stable and long-term revenue streams with minimal landlord responsibilities. The triple net lease structure, where tenants cover most property-related expenses, reduces the unpredictability of operating costs and provides investors with a consistent return on their investment. This makes NNN leases particularly attractive for those who wish to build wealth without the headaches of traditional property management, such as addressing maintenance issues or covering unexpected expenses. Additionally, many NNN leases feature annual rent escalations, providing a hedge against inflation and further enhancing their appeal.
Automotive and healthcare tenants, in particular, stand out in the NNN space due to their essential nature. Our cars are indispensable for daily life in a country where the average age of vehicles on the road continues to increase. Automotive service tenants, such as repair shops and parts retailers, provide services that are crucial regardless of economic conditions. During downturns, people are more likely to maintain their existing vehicles rather than buying new ones, ensuring sustained demand for automotive services. The sector’s resilience to e-commerce disruption—since vehicle maintenance and repair cannot be performed online—further adds to its attractiveness as a NNN investment.
Healthcare tenants offer a different yet equally compelling kind of essential service. With an aging population driving the demand for healthcare, tenants such as urgent care centers, dialysis clinics, and ambulatory care facilities are becoming increasingly valuable. Healthcare services are not only recession-resistant but also necessary for public health and well-being, ensuring consistent occupancy and reliable cash flow. Additionally, many healthcare tenants invest significantly in customizing their spaces, leading to long-term leases that provide property owners with predictable income. The combination of demographic trends and the need for accessible, high-quality medical care makes healthcare one of the most stable sectors for NNN investment.
The landscape for net lease investments continues to evolve, but essential tenants—those providing critical goods and services—are poised for sustained growth and stability. Healthcare and automotive sectors stand out as particularly resilient in the NNN (Triple Net Lease) space due to their recession-resistant nature, ongoing growth drivers, and essential services. Here’s why these sectors, especially urgent care and auto repair tenants, are likely to perform well in 2025.
Automotive NNN Sector: Essential for a Mobility-Driven Society
Automotive service tenants, including auto parts retailers and repair shops, provide services that are necessary regardless of economic conditions. People rely on vehicles for daily transportation, and as the U.S. vehicle fleet ages, the demand for maintenance and repair continues to grow.
Key Auto NNN Tenants:
- AutoZone (Investment Grade: BBB/Stable/A-2)
- O’Reilly Auto Parts (Investment Grade: BBB)
- Advance Auto Parts (Investment Grade: BBB-)
- Discount Tire (Privately held, with strong performance metrics)
- Firestone Complete Auto Care (Owned by Bridgestone, Investment Grade: A-)
Auto Sector Strengths:
- Recession-Resistant Demand: Automotive services are essential, especially during economic downturns when consumers are more likely to maintain existing vehicles rather than purchasing new ones. The average age of cars on U.S. roads is now over 12 years, a record high, which drives the need for maintenance and repairs-Commerce Resistant**: While some retail sectors face disruption from online shopping, automotive services remain largely insulated. Essential services like oil changes, brake repairs, and tire installations cannot be performed remotely, ensuring continued foot traffic and demand for physical locations .
- Guarantees and Long-Term Stability: Many auto repair and parts stores come with corporate-backed leases, providing a layer of financial security to investors. The presence of long-term leases with rental escalations is particularly advantageous during inflationary periods, as they help maintain the property’s value in real terms .
- Support fconomies: Automotive repair and maintenance tenants tend to attract repeat customers who rely on their local services. This supports the local economy and increases the tenant’s stickiness, as customers prefer to visit a trusted nearby service center.
- Growing Electric Vehicle (EV) Maintenance Market: While EVs require less frequent maintenance, they still require tire services, brake replacements, and software diagnostics, which leading auto service centers are increasingly offering. This trend could open new revenue streams for NNN automotive tenants as the EV market expands.
Healthcare NNN Sector: An Industry Driven by Demographic and Technological Trends
The healthcare sector has been among the strongest performers in NNN real estate due to the essential nature of medical services. This is particularly true for urgent care and ambulatory care facilities, which provide critical services with high demand.
Key Healthcare NNN Tenants:
- DaVita (Investment Grade: BB)
- Fresenius Medical Care (Investment Grade: BBB-)
- Aspen Dental (Strong performance, not investment grade)
- American Family Care (AFC) Urgent Care (Privately held, strong growth metrics)
- CareNow Urgent Care (Owned by HCA Healthcare, Investment Grade: BBB-)
- MedExpress Urgent Care (Owned by UnitedHealth Group, Investment Grade: A+)
Healthcare Sector Strengths:
- Essential Services with High Barriers to Entry: Healthcare services, including dialysis centers, dental clinics, and urgent care facilities, are fundamental to community health and wellness. With stringent regulations and high setup costs, these facilities are less likely to face competition from new entrants, providing stability for investors.
- Aging Population Driving Demand: The U.S. population is aging rapidly, with the number of people over 65 expected to nearly double by 2060. This demographic shift increases the demand for healthcare services such as dialysis, ambulatory care, and senior-focused urgent care, which will remain critical in 2025 and beyond.
- Technological Advancements Enabling Growth: Innovations in medical technology and telemedicine are improving healthcare outcomes, while also increasing the need for physical locations where advanced equipment and specialized care can be provided. This complements urgent care and outpatient clinics, which can offer immediate services beyond the scope of digital health platforms.
- Recession-Proof and Pandemic-Resilient: The COVID-19 pandemic underscored the importance of accessible healthcare, and urgent care facilities emerged as a crucial part of the healthcare infrastructure. Even in recessions, people cannot forgo healthcare, making these facilities stable, long-term investments .
- Support from Public: Government initiatives such as Medicare and Medicaid continue to provide financial support for essential healthcare services, adding a layer of security for healthcare real estate investments. Ambulatory care and dialysis centers benefit from these programs, ensuring continued demand and stable cash flow.
- Expanding Outpatient Care Market: As hospitals face cost pressures, there is a shift towards outpatient care facilities, including urgent care and ambulatory surgery centers. These facilities can provide medical services at lower costs than traditional hospitals, which appeals to both patients and insurers.
Making the Grade: Why These Tenants Are Ideal for NNN Investments
1. Recession Resistance
Both the automotive and healthcare sectors are anchored in necessity. When economic conditions tighten, people may defer luxury purchases but will continue to invest in vehicle maintenance and seek medical care. This recession-resistant nature ensures stable cash flow for investors, as demand for these services is relatively inelastic.
2. High E-Commerce Immunity
Unlike retail stores susceptible to e-commerce disruption, both automotive service providers and healthcare facilities require a physical presence to deliver their services. This makes them less vulnerable to digital competition and more attractive for real estate investors seeking stable, long-term tenants.
3. Corporate Backing and Long-Term Leases
Tenants like AutoZone, Fresenius Medical Care, and CareNow Urgent Care are often part of larger corporate structures that provide financial stability. Their leases typically include long durations with favorable terms, such as rental escalations that help property owners hedge against inflation.
4. Sector Growth Supported by Demographics and Technology
The aging U.S. population will continue to support growth in the healthcare sector, while the aging vehicle fleet will sustain demand for automotive services. Technological advancements in healthcare and the shift towards electric vehicles are emerging trends that promise to open new opportunities for both sectors in the NNN market.
5. Stable and Predictable Income
Healthcare and automotive NNN tenants provide essential services that are not easily disrupted. The healthcare sector, in particular, offers tenants that stay for extended periods due to the significant investments required for specialized build-outs. This ensures low turnover rates and stable income for property owners.
Key Additional Tenants to Watch in 2025:
- Jiffy Lube: Offers automotive maintenance services essential for both conventional and electric vehicles.
- Concentra Urgent Care: Provides occupational health and urgent care services with a broad national presence.
- Pep Boys: A growing player in auto repair and tire services, well-positioned to cater to the aging vehicle market.
- BioLife Plasma Services: Provides critical plasma collection services and benefits from growing demand for biopharmaceuticals.
By focusing on essential tenants like those in the automotive and healthcare sectors, investors can build a robust NNN portfolio capable of weathering economic fluctuations while benefiting from the growth dynamics of these crucial industries. With stable income streams, long-term leases, and minimal e-commerce disruption, automotive and healthcare tenants are “making the grade” as top performers for NNN investments in 2025.
If you’re looking to acquire, exit, or refinance an investment property with a strong automotive or healthcare tenant, connect with the Investment Grade acquisition team. Whether you need to refinance maturing debt in the NNN market or unlock liquidity through strategic sale-leaseback solutions, we specialize in creating tailored financial structures that maximize the value of your assets. Our expertise in automotive and healthcare properties ensures a seamless process, helping you capitalize on market opportunities and secure your investment’s future. Contact us today to explore your options and make the most of your investment.
