What the Fed’s “Higher for Longer” Stance Means for NNN Investors

The message from Wall Street economists is now clear: the Federal Reserve is unlikely to cut interest rates for the rest of 2026, and net lease investors should plan accordingly. For anyone who owns a triple net property or is shopping for one, understanding where rates are headed is the single most important factor in pricing a deal right now.

Here’s a plain-English breakdown of what’s happening and what it means for NNN cap rates.

The Fed Is Staying Put

In the latest Reuters poll of economists, nearly 70% now expect the Fed’s benchmark rate to hold in its current 3.50%–3.75% range through the end of 2026. That’s a sharp shift from earlier in the year, when most forecasters were penciling in a June rate cut. Not a single economist surveyed expected a cut at the Fed’s mid-June meeting, the first under new Chairman Kevin Warsh.

The reason is inflation that won’t quit. The Fed’s preferred inflation gauge has climbed to its highest level since 2023, running at roughly double the central bank’s 2% target. Energy prices, driven up by the ongoing conflict in the Middle East, have been a major culprit, with oil moving sharply higher and feeding into nearly every corner of the economy.

Some Fed officials have even floated the possibility that rates may need to rise later this year rather than fall. As one chief economist put it, getting a consensus of Fed officials to cut rates anytime soon will be incredibly difficult.

Even Goldman Sachs Moved Its Forecast

When one of the most influential voices on Wall Street changes its tune, it’s worth paying attention. Goldman Sachs pushed its forecast for the next rate cut all the way back to December 2026, a delay driven by inflation hovering near 3% and a jobs market that keeps outperforming expectations. The bank held its terminal rate view at 3% to 3.25%, signaling a slower and shallower path to lower rates than markets had been hoping for.

The takeaway for property owners: don’t wait for cheap money to come riding to the rescue. The cost of capital is likely to stay elevated well into next year.

What This Means for NNN Cap Rates

Cap rates and interest rates move together over time. When borrowing costs stay high, buyers need higher returns to justify a purchase, which puts upward pressure on cap rates (and downward pressure on prices). We’ve already seen this play out across most net lease sectors over the past 18 months.

But here’s the nuance that matters for sellers: the highest-credit, lowest-risk assets have held their pricing far better than the rest of the market. A corporate-guaranteed pharmacy or a long-term dollar store lease still commands aggressive pricing because investors are flocking to safety in an uncertain environment. You can see current cap rate ranges across every sector on our NNN Cap Rate tracker.

For owners of strong assets, this is actually a reasonable time to sell. Demand for quality, recession-resistant tenants like CVS and Dollar General remains deep, even as rates stay high. Buyers with 1031 exchange deadlines are especially active and often willing to pay a premium for a clean, passive, credit-backed deal.

The 1031 Exchange Angle

One group that doesn’t have the luxury of waiting for rates to drop: 1031 exchange buyers. When someone sells an investment property and needs to redeploy capital within the strict 45-day identification and 180-day closing window, they’re buying regardless of where rates sit. That steady, deadline-driven demand continues to support NNN pricing even in a higher-rate environment.

If you’re considering a sale and want to understand how to position your property to capture this buyer pool, our 1031 exchange team can walk you through the timing.

The Bottom Line

The “higher for longer” rate environment is now the base case, not the worst case. For NNN investors, that means:

Sellers of strong, credit-backed assets still have a window to transact at favorable pricing while buyer demand for safety runs high. Buyers should underwrite deals assuming rates stay elevated through 2026 rather than betting on near-term relief. And everyone should keep a close eye on energy prices, since that’s the variable most likely to determine whether the Fed moves at all.