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FAQ: Year-End Investment Activity in Single-Tenant Net Lease Properties Driven by Tax Incentives
TL;DR
Investors gain immediate tax advantages by purchasing commercial properties like quick-lube facilities before 2025 closes to leverage 100% bonus depreciation for higher returns.
Recent federal legislation restored 100% bonus depreciation for automotive commercial real estate, driving year-end sales as buyers use tax strategy to maximize depreciation benefits on single-tenant net lease assets.
This tax policy encourages investment in small-footprint commercial properties, supporting business expansion and economic activity while making commercial real estate more accessible to diverse investors.
Quick-lube facilities offer surprising investment opportunities with full tax depreciation benefits despite their small size, attracting capital in a challenging 2025 market that required creative financing solutions.
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Buyers are pursuing bonus depreciation benefits before 2025 closes, with recent federal legislation restoring 100% bonus depreciation for specific commercial real estate categories including automotive-related properties.
Brittany Megrath, CCIM and principal of M Square Commercial, reports that tax strategy rather than market timing is driving the urgency, particularly for completed single-tenant net lease assets.
The restoration applies particularly to automotive asset classes, including car washes and quick-lube facilities, which offer immediate tax benefits alongside operational returns.
She characterizes them as underappreciated opportunities that offer tax advantages combined with practical site characteristics (small footprint fitting into small spaces) and established tenant expansion programs with many corporate tenants actively expanding.
2025 was a fairly slow-moving year where deals took significant effort to complete, requiring creativity and turning to private lenders versus institutional lenders when institutional financing proved too restrictive or slow.
The lending source dictates the project structure, hold period, and exit strategy, with community-focused banks having strict requirements and alternative lenders offering faster execution at potentially higher costs.
M Square anticipates that continued interest rate declines will improve investment appetite for single-tenant net lease assets as alternative fixed-income returns become less competitive.
According to Megrath, this is a great time for developers to sell because investors are trying to place money in different categories to take advantage of depreciation on new purchases.
Readers can visit M Square Commercial or learn more about Brittany Megrath, CCIM.
Curated from Keycrew.co
