For investors executing a Florida 1031 exchange, choosing the right property type is just as important as choosing the right location. Not all triple net lease (NNN) properties are created equal—each category offers distinct advantages in terms of cash flow, tax benefits, recession resistance, and long-term appreciation potential.

This comprehensive guide examines the top Florida NNN property types that sophisticated investors are adding to their portfolios in 2025, complete with real-world cap rate ranges, tenant credit analysis, and strategic considerations for each asset class.

Whether you’re escaping California’s 13.3% state income tax or diversifying from apartment buildings, understanding these property types will help you make informed investment decisions that align with your wealth preservation goals.

Quick Service Restaurants (QSRs): The Premium NNN Investment

Overview: America’s Favorite Investment-Grade Tenants

Quick Service Restaurants—commonly called fast food chains—represent some of the most sought-after NNN properties in Florida. These drive-thru concepts combine brand recognition with predictable cash flow, making them ideal for 1031 exchange investors seeking stability.

Top Florida QSR Tenants in 2025

Premium Tier (Investment-Grade Credit):

• Chick-fil-A: BBB+ credit rating, typically 20-year leases, 5.5%-6.5% cap rates
• McDonald’s: BBB+ credit rating, strong corporate guarantees, 5.25%-6.25% cap rates
• Starbucks: BBB+ credit rating, urban/suburban locations, 5.5%-6.75% cap rates

Strong Performers:

• Wendy’s: Corporate and franchise locations, 6.0%-7.0% cap rates
• Taco Bell: Yum! Brands backing (BBB- rated), 6.25%-7.25% cap rates
• Panera Bread: Premium fast-casual concept, 6.0%-6.75% cap rates
• KFC: Yum! Brands, consistent performance, 6.5%-7.5% cap rates

Current Florida QSR Market Conditions (2025)

Cap Rate Range: 5.5% – 7.5% depending on tenant credit, lease length, and location

Typical Investment Size: $1,000,000 – $3,500,000

Lease Terms: 10-25 years with 10% rent increases every 5 years typical

Annual Rent Escalations: 2-3% built into most corporate leases

Why QSRs Excel in Florida

Florida’s explosive population growth drives QSR performance:

• Tourism Economy: Orlando, Miami, and Tampa attract 130+ million visitors annually
• Population Surge: 1.5 million new residents from 2020-2025
• Drive-Thru Culture: Florida car-dependent lifestyle favors QSR convenience
• Year-Round Operations: No seasonal closures unlike northern markets

The McDonald’s Real Estate Strategy: Learn from the Master

Many investors don’t realize that McDonald’s real estate portfolio is worth more than its restaurant operations. As a former McDonald’s CFO famously stated: “We are not technically in the food business, but rather in the real estate business.”

McDonald’s Three-Step Wealth Building Model:

1. Strategic Site Selection: Subsidiary company identifies high-traffic locations with growth potential
2. Value Creation Through Traffic: Consistent customer flow drives property appreciation beyond typical commercial real estate
3. Rent Collection: Franchise locations pay premium rents backed by corporate guarantees

Investor Application: When evaluating Florida QSR properties, look for locations where franchisees are expanding aggressively. The combination of NNN cash flow AND property appreciation from increasing traffic creates superior returns.

2025 QSR Industry Trends

The restaurant sector continues showing remarkable strength, with the U.S. Fast Food & Quick Service Restaurant Market valued at $248.8 billion in 2024, projected to grow at 3.74% CAGR through 2033.

Key 2025 Developments:

• Digital Transformation: Mobile ordering, app-based loyalty programs driving traffic
• Menu Diversification: Plant-based options, healthier choices expanding customer base
• Enhanced Delivery: Third-party delivery integration creating new revenue streams
• Automation: Drive-thru AI ordering reducing labor costs, improving margins

Tax Benefits: Standard Depreciation

QSR properties follow standard commercial depreciation:

• 39-year depreciation schedule for building improvements
• Land non-depreciable (typically 20-30% of purchase price)
• Cost segregation opportunities for equipment, fixtures, and site improvements
• 100% bonus depreciation available for qualifying components (furniture, equipment)

Example Tax Impact:

• Purchase Florida Chick-fil-A: $2,500,000
• Land value: $500,000 (20%)
• Building/improvements: $2,000,000
• Annual depreciation: ~$51,280
• First-year bonus depreciation potential: $300,000-500,000 (equipment/fixtures)

Strategic Considerations for QSR Investors

✅ Advantages:

• Premium tenant credit quality (many investment-grade)
• Long lease terms (15-25 years typical)
• Built-in rent escalations
• High visibility locations appreciate well
• Essential service (people always need to eat)
• Corporate guarantees on many franchises

⚠️ Considerations:

• Higher entry prices ($1.5M-$3.5M typical)
• More competitive acquisition market (lower cap rates)
• Menu trends can impact specific brands
• Franchise vs. corporate lease distinction matters

Best For: Investors seeking premium credit tenants, willing to accept lower cap rates for security, and planning to hold long-term.

Dollar Stores: Recession-Proof Wealth Preservation

Overview: America’s Fastest-Growing Retailer

While premium QSRs and gas stations get attention, dollar stores quietly dominate as recession-proof NNN investments. Dollar General, Dollar Tree, and Family Dollar continue expanding aggressively across Florida, particularly in underserved rural and suburban markets.

Top Florida Dollar Store Tenants

Dollar General (NYSE: DG):

• 19,147 locations nationwide (as of November 2023)
• Investment-grade credit rating (BBB)
• 1,000+ new stores opening annually
• Cap rates: 6.5%-7.75%
• Typical lease: 15 years with options

Dollar Tree (includes Family Dollar):

• 16,000+ locations combined
• Strong corporate backing
• Cap rates: 6.75%-8.0%
• 10-15 year leases typical

Current Florida Dollar Store Market (2025)

Cap Rate Range: 6.5% – 8.0%

Typical Investment Size: $800,000 – $2,000,000 (most accessible NNN category)

Lease Terms: 15-20 years standard

Store Sizes: 7,000-10,000 square feet typical

Why Dollar Stores Thrive in Florida

Demographic Advantages:

• Rural Market Dominance: 80% of Dollar General stores serve communities of 20,000 or fewer residents
• Food Desert Solutions: Many Florida communities lack full-service groceries
• Tourism Support: Convenient tourist stops for essentials
• Retiree Appeal: Fixed-income seniors appreciate value pricing

Economic Resilience:

• Inflation Beneficiary: High inflation drives customers to value retailers
• Recession Performance: Economic downturns increase traffic and sales
• Middle-Class Trade-Down: As J.C. Penney, Kohl’s, and Macy’s lose customers, dollar stores gain market share

Impressive Growth & Stability Numbers

Dollar General’s performance demonstrates exceptional resilience:

2024 Financial Performance:

• Net sales growth: 4.7% to 5.3% projected
• Same-store sales growth: 1% to 1.6%
• Consistent growth even in mature store base

Food Retail Transformation:

• 89.7% increase in food sales from 2008-2020
• Dollar stores now significant players in grocery segment
• Not technically grocers, but filling essential needs

Strategic Location Planning

Smart Expansion Strategy:

• Stores placed 5-10 miles apart to avoid cannibalization
• Serve communities effectively without oversaturation
• Quick in-and-out shopping experience
• Proximity to complementary services (banks, pharmacies, gas stations)

Florida-Specific Opportunities:

• Panhandle rural communities
• Growing exurban areas around Tampa, Orlando, Jacksonville
• Agricultural communities (Polk County, Hendry County, etc.)
• Coastal small towns between major metros

Are There Too Many Dollar Stores?

Despite 19,147 Dollar General locations alone, the chain continues thriving and growing. The secret? Strategic market segmentation.

Market Positioning:

• Fill gaps left by departing big-box retailers
• Serve areas too small for Walmart or Target
• Provide convenience over selection
• Capitalize on “quick trip” shopping behavior

Recession-Proof Performance

While no business is completely recession-proof, dollar stores come remarkably close:

Historical Performance:

• 2008 Financial Crisis: Dollar stores thrived while traditional retail collapsed
• 2020 Pandemic: Essential service designation + surge in demand
• 2022-2024 Inflation: Record traffic and sales growth

Future Recession Preparation:

• Well-positioned for next economic downturn
• Appeal to value-conscious shoppers increases during hard times
• Low price points maintain affordability regardless of consumer pressure

Ideal NNN Lease Benefits

Dollar stores excel in the NNN criteria investors prioritize:

✅ Passive Income Advantages:

• 15-year lease guarantees provide reliable income stream
• Zero landlord responsibilities (true triple net)
• Minimal tenant improvement costs
• Predictable rent escalations

✅ Property Characteristics:

• Simple single-story construction (lower maintenance)
• Small parking lots (lower repaving costs)
• Located in solid demographic areas
• Excellent visibility and signage

✅ Corporate Backing:

• Investment-grade credit (Dollar General: BBB)
• Publicly traded companies with transparent financials
• Strong balance sheets support lease obligations

Tax Considerations: Standard Depreciation

Dollar stores follow standard commercial depreciation schedules:

• 39-year timeline for building improvements
• Cost segregation opportunities for fixtures and equipment
• Bonus depreciation available for qualifying components

Typical Depreciation Example:

• Purchase Florida Dollar General: $1,500,000
• Land value: $300,000 (20%)
• Building: $1,200,000
• Annual depreciation: ~$30,770
• First-year bonus depreciation: $150,000-250,000 (shelving, fixtures, HVAC)

Strategic Considerations for Dollar Store Investors

✅ Advantages:

• Most accessible entry point ($800K-$2M vs. $2M+ for QSRs)
• Truly recession-resistant performance
• Consistent corporate expansion (guaranteed demand for new locations)
• Higher cap rates than premium QSRs (better cash flow)
• Simple property type (low maintenance complexity)
• Essential service tenants

⚠️ Considerations:

• Lower credit quality than McDonald’s/Chick-fil-A (though still investment-grade)
• Slower appreciation potential (functional buildings, not “sexy” assets)
• Some locations may experience future competition
• Store closures possible in oversaturated markets (though rare)

Best For: First-time NNN investors, those seeking accessible entry points, investors prioritizing cash flow over appreciation, and anyone wanting truly recession-proof tenants.

Comparison Table: Florida NNN Property Types (2025)

Property Type	Cap Rate Range	Investment Size	Lease Terms	Credit Rating	Recession Resistance	Tax Benefits	Best For
QSRs (Premium)	5.5%-7.5%	$1.5M-$3.5M	15-25 years	BBB to BBB+	High	Standard depreciation, bonus for equipment	Investors seeking premium credit, long-term appreciation
Gas Stations/C-Stores	6.5%-8.0%	$1.5M-$4M	15-20 years	Varies	Very High	15-year depreciation + 100% bonus	High-income earners, aggressive tax strategies
Dollar Stores	6.5%-8.0%	$800K-$2M	15-20 years	BBB (DG)	Very High	Standard depreciation	First-time investors, recession protection
Pharmacies	5.5%-7.0%	$2M-$5M	20-25 years	BBB (CVS)	High	Standard depreciation	Conservative investors, maximum stability

Due Diligence Checklist by Property Type

For QSR Properties:

✅ Franchise vs. Corporate Lease (corporate preferred)
✅ Sales Volume Verification (request operator’s financials)
✅ Traffic Counts (minimum 20,000 vehicles daily)
✅ Lease Assignment Rights (can franchisor reassign location?)
✅ Competition Analysis (saturation concerns)
✅ Drive-Thru Configuration (double lanes increasing throughput)
✅ Parking Adequacy (sufficient for peak times)
✅ Signage Visibility (critical for impulse traffic)

For Gas Station/C-Store Properties:

✅ Phase I Environmental Assessment (underground tank concerns)
✅ Phase II if Phase I shows concerns (soil/groundwater testing)
✅ Tank Upgrade Compliance (federal/state regulations)
✅ Fuel Sales Percentage (must exceed 50% for tax benefits)
✅ Inside Sales Trends (non-fuel revenue growth)
✅ Gallons Sold Monthly (100,000+ preferred)
✅ Equipment Age/Condition (dispensers, tanks, canopy)
✅ Proximity to Competitors (market saturation)

For Dollar Store Properties:

✅ Corporate Store Analysis (Dollar General expansion plans)
✅ 5-Mile Radius Demographics (population, income, age)
✅ Competing Dollar Stores (avoid oversaturation)
✅ Anchor Tenant Proximity (nearby grocery, pharmacy)
✅ Visibility from Main Road (critical for impulse visits)
✅ Parking Lot Condition (repaving needs)
✅ Building Systems Age (HVAC, roof, structure)
✅ Sales Performance (if available, verify against benchmarks)

For Pharmacy Properties:

✅ Senior Population Density (65+ demographics within 3 miles)
✅ Competing Pharmacies (market share analysis)
✅ Medical Offices Nearby (prescription generation sources)
✅ Medicare Advantage Penetration (insurance coverage quality)
✅ MinuteClinic or Health Services (additional revenue streams)
✅ Drive-Thru Configuration (essential for senior convenience)
✅ ADA Compliance (handicapped access, parking, ramps)
✅ Prescription Volume Trends (request if available)

Tax Planning Strategies by Property Type

Maximum Tax Deferral Strategy (Gas Stations)

Objective: Eliminate taxable income for 5-10 years

Approach:

1. Purchase Florida gas station with 1031 exchange
2. Engage cost segregation specialist immediately
3. Claim 100% bonus depreciation on qualifying components
4. Generate $500K-$1M first-year deduction
5. Offset W-2 income if qualifying as real estate professional

Best For: High-income earners (executives, business owners, professionals)

Balanced Income & Tax Benefits (QSRs)

Objective: Strong cash flow with moderate tax benefits

Approach:

1. Purchase premium QSR (Chick-fil-A, Starbucks)
2. Standard depreciation schedule
3. Cost segregation for equipment and fixtures
4. Claim bonus depreciation on qualifying components
5. Generate reliable income with tax-efficient structure

Best For: Investors seeking balance of security and cash flow

Cash Flow Priority (Dollar Stores)

Objective: Maximum passive income, simpler tax approach

Approach:

1. Purchase dollar store at higher cap rate (7%+)
2. Standard depreciation schedule
3. Minimal complexity in tax planning
4. Focus on cash-on-cash returns
5. Plan for long-term hold (15+ years)

Best For: Retirees, passive income seekers, first-time NNN investors

Generational Wealth Transfer (Pharmacies)

Objective: Long-term hold for step-up in basis

Approach:

1. Purchase pharmacy with 20-25 year lease
2. Hold until death for step-up in basis
3. Heirs inherit at current market value (no capital gains)
4. Continuous tax-deferred income during life
5. No taxes on appreciation at death

Best For: Estate planning focus, older investors (60+), generational wealth building

Getting Started: Your Property Type Decision Framework

Answer These Five Questions:

1. What’s your investment size range?

• Under $1M: Dollar stores
• $1M-$2M: Dollar stores, some QSRs
• $2M-$3M: QSRs, gas stations, some pharmacies
• $3M+: Premium QSRs, pharmacies, larger gas stations

2. What’s your tax situation?

• High W-2 income: Gas stations (aggressive depreciation)
• Capital gains deferral: All types work (1031 exchange)
• Moderate income: QSRs or dollar stores (balanced approach)
• Estate planning: Pharmacies (longest leases, step-up strategy)

3. How important is recession protection?

• Critical: Dollar stores, gas stations
• Important: Pharmacies, essential QSRs
• Moderate: Premium QSRs in strong locations

4. What’s your planned hold period?

• 5-10 years: Gas stations (maximize tax benefits)
• 10-15 years: QSRs, dollar stores
• 15-25+ years: Pharmacies (match lease term)
• Until death: Pharmacies (step-up in basis strategy)

5. How much management do you want?

• Zero: All NNN types are truly passive
• Minimal communication: Pharmacies, premium QSRs (stable tenants)
• Moderate oversight: Dollar stores, gas stations (monitor performance)

Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or financial advice. Real estate investments involve risk, including potential loss of principal. 1031 exchanges have complex IRS requirements and strict timelines. Consult with qualified tax advisors, CPAs, attorneys, and financial advisors before executing any investment transaction. Property performance, tenant credit, and market conditions can change. Past performance does not guarantee future results. Income Realty Advisors is not a Qualified Intermediary, CPA firm, or law firm. Environmental assessments should be performed by qualified professionals for all gas station acquisitions.

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