No net lease tenant is truly recession proof. Rite Aid, Red Lobster, Bed Bath & Beyond, and Pier 1 were all once considered dependable tenants. The better term is recession resilient: tenants whose sales and credit have held up through past downturns. This page separates two different risks, recession sensitivity and long-term disruption, and uses dated results from company reports to show how major tenants behaved in the 2008 to 2009 recession and in 2020. Ratings shown update from our tenant ratings database; for what investment grade means, see the investment grade guide.
Two Different Risks
- Recession sensitivity is cyclical: sales fall when the economy weakens and recover afterward. Discount retail, quick-service restaurants, and auto parts have often held up or gained as consumers trade down.
- Disruption risk is structural: a business model loses ground regardless of the economy. Standalone pharmacies, movie theaters, and some specialty retailers face this risk.
A tenant can be strong on one axis and weak on the other. Prescription demand holds up in recessions, yet Walgreens announced in October 2024 that it planned to close about 1,200 stores over three years, suspended its dividend in January 2025, and was taken private by Sycamore Partners in August 2025 after losing its investment grade ratings in 2024. CVS, rated BBB by S&P, closed about 900 stores over 2022 through 2024 under a plan announced in 2021.
| Sector | Recession sensitivity | Disruption risk | Notes |
|---|---|---|---|
| Dollar and discount stores | Low | Moderate | Trade-down demand in downturns; competition from online and big box delivery |
| Quick-service restaurants | Low to moderate | Low | Drive-thru and value menus help; franchisee finances vary |
| Auto parts and service | Low | Low | Consumers repair older vehicles instead of replacing them |
| Convenience and fuel | Low | Moderate over the long term | Food and fuel demand are steady; long-run shift to electric vehicles |
| Grocery and warehouse clubs | Low | Moderate | Online grocery is growing but stores remain central |
| Pharmacy | Low | High | Format pressure from mail order, online pharmacies, and big box competitors |
| Bank branches | Moderate | High | Strong credits, but branch counts are shrinking |
| Casual dining | High | Moderate | Discretionary; several chains have gone bankrupt in downturns |
| Movie theaters | High | High | Attendance has not recovered to pre-2020 levels |
InvestmentGrade.com assessments for discussion, not ratings. Individual tenants within a sector can differ sharply.
What Past Downturns Showed
2008 to 2009
The recession rewarded value-oriented retailers. Dollar General reported same-store sales growth of 9.0% for fiscal 2008 and 9.5% for fiscal 2009. McDonald’s global comparable sales rose 6.9% in 2008. Casual dining struggled: Bennigan’s company-owned restaurants closed in 2008 when its operator filed for Chapter 7 liquidation.
2020
Pandemic closures sorted tenants by whether they could stay open. Dollar General reported same-store sales growth of 21.7% in the first quarter of 2020, 18.8% in the second quarter, and 12.2% in the third. McDonald’s results show why one metric is not enough: U.S. comparable sales rose 0.4% for 2020, while global comparable sales fell 7.7% and diluted earnings per share fell 20% to $6.31. Non-essential tenants suffered most: 24 Hour Fitness filed for Chapter 11 in June 2020, and Regal’s parent Cineworld filed in September 2022 after a slow recovery in theater attendance.
Limits of this evidence
These are a few recessions with different causes, and the figures use each company’s own measures and fiscal years, so they are not perfectly comparable. Past trade-down patterns are useful evidence, but they do not guarantee how a tenant will perform in the next downturn; reassess the tenant’s current finances, competition, and the scenario you are modeling.
Current Ratings for Commonly Cited Resilient Tenants
| Tenant | S&P | Moody’s |
|---|---|---|
| Dollar General | BBB | Baa3 |
| McDonald’s | BBB+ | Baa1 |
| AutoZone | BBB | Baa1 |
| O’Reilly Automotive | BBB | Baa1 |
| Walmart | AA | Aa2 |
| 7-Eleven, Inc. | A- | Baa2 |
| CVS Health | BBB | Baa3 |
| Tractor Supply | BBB | Baa1 |
Current ratings from our ratings database; they may differ from ratings held during past recessions. A rating applies to a lease only if the rated entity signs or guarantees it.
Rising Rates: Income vs. Market Value
The 2022 rate shock was a different kind of stress. Consumer spending held up, but rising interest rates pushed down the market value of long-duration assets. Investment grade bonds fell sharply: the Bloomberg US Corporate Index lost about 15.8% in 2022. Net lease property values also fell as cap rates rose.
For both assets, separate cash income from market value. A fixed-rate bond keeps paying its coupon if the issuer pays, and a net lease keeps paying rent if the tenant pays, even while the market value of each falls. Losses are realized when an owner sells below cost or when a borrower or tenant defaults; a bond held to maturity returns par if the issuer pays, while a property’s value at sale depends on the market and the lease at that time.
Building a More Resilient NNN Portfolio?
We source and underwrite net lease properties across credit tiers, review the lease obligor and guarantor, and represent owners on dispositions and 1031 exchanges. On the majority of transactions, there is no separate fee to you as the buyer for representation; the listing broker pays a cooperating commission.
Frequently Asked Questions
Are NNN properties recession proof?
No. Some tenants have held up well in past recessions, but none is immune. Tenants once seen as safe, including Rite Aid and Red Lobster, have gone bankrupt.
Which tenants held up best in 2008 and 2020?
Discount retailers, quick-service restaurants, and auto parts retailers generally did well. Dollar General reported same-store sales growth of 9.0% in fiscal 2008, 9.5% in fiscal 2009, and 21.7% in the first quarter of 2020.
Did McDonald’s grow earnings in 2020?
No. McDonald’s diluted EPS fell 20% to $6.31 in 2020. U.S. comparable sales rose 0.4%, while global comparable sales fell 7.7%.
Is pharmacy a recession resilient sector?
Prescription demand holds up in recessions, but standalone pharmacies face structural pressure. Walgreens has been closing stores and was taken private in 2025, and CVS closed about 900 stores from 2022 through 2024.
Will the trade-down pattern repeat in the next recession?
It may, but past patterns are not a guarantee. The cause of the next downturn and each tenant’s finances and competition will matter.
Company figures are from each company’s earnings releases and annual reports for the periods named; bond index return from fund prospectuses filed with the SEC. Updated October 4, 2026.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced fluctuate continuously and are sourced from public market data as of the date noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
