Top Midwest NNN Markets: Where Investors Are Finding Value in 2025

The Case for Midwest NNN Investing

The NNN investment conversation in 2025 often centers on Sunbelt markets — Dallas, Phoenix, Atlanta, and Nashville dominate the headlines. But investors focused purely on these markets are missing some of the most compelling risk-adjusted yields available in the net lease sector. Midwest markets offer strong fundamentals, durable tenant demand, and cap rates that have held up better than coastal and Sunbelt markets during the recent rate cycle.

Here's a data-driven look at the top Midwest NNN markets and what's driving them.

Indianapolis, IN: The Midwest's Quiet Overachiever

Indianapolis has become one of the most consistently strong NNN markets in the country. The metro's fundamentals — population growth, Fortune 500 presence (Eli Lilly, Salesforce, Anthem), central logistics position, and no state income tax on residents — have driven robust retail demand and new NNN construction.

• Typical NNN cap rates: 5.75%–7.25% (strong credit tenants)
• Top tenants in market: Dollar General, McDonald's, Starbucks, Taco Bell, AutoZone, CVS
• Population growth: MSA population up 12% since 2015, one of the strongest Midwest growth rates
• New construction NNN pipeline: Active — particularly QSR and dollar store formats along suburban growth corridors

Indianapolis NNN properties at the 6.25%–7.00% cap rate range represent compelling value for investors who would pay 4.75%–5.25% for the same tenant in a California or Florida market. The fundamental business of the tenant is identical — only the geography changes.

Columbus, OH: The 15-University Market

Columbus is arguably the most underappreciated major city in the Midwest for commercial real estate investment. With 15 colleges and universities (anchored by Ohio State's 60,000+ enrollment), a state capital with stable government employment, and a rapidly diversifying technology sector (Amazon, JPMorgan Chase, Nationwide Insurance are all headquartered or have major campuses here), Columbus offers NNN investors a uniquely resilient demand base.

• Typical NNN cap rates: 5.50%–7.00%
• Population: 2.1M metro, growing at 1.5%+ annually
• Key investment corridors: Dublin, Westerville, New Albany, Easton — high-income suburban markets with strong QSR and retail demand
• Notable recent NNN transactions: Multiple McDonald's, Starbucks drive-thru, and Dollar General transactions in the 5.75%–6.50% range

Kansas City, MO/KS: The Two-State Advantage

Spanning the Missouri-Kansas border, the Kansas City metro offers NNN investors flexibility across two regulatory environments. Kansas offers lower property taxes in many submarkets, while Missouri provides access to major infrastructure corridors. The metro's central US location makes it a key distribution and logistics hub, which drives ancillary retail demand along major freight corridors.

• Typical NNN cap rates: 6.00%–7.50%
• Strengths: Strong dollar store, QSR, and auto parts tenant demand along suburban growth corridors
• 2025 outlook: Several large employers have announced expansions in the KC metro (Panasonic EV battery plant, continued growth of tech sector). New population growth is supporting demand for suburban QSR and dollar store formats

Minneapolis-St. Paul, MN: Higher Taxes, Higher Quality

Minneapolis is the most financially sophisticated NNN market in the Midwest, with institutional quality comparable to coastal markets. The twin cities metro is home to 17 Fortune 500 companies per capita — more than any other metro in the country — creating a high-income population that drives robust demand for QSR, pharmacy, and convenience retail.

• Typical NNN cap rates: 5.50%–6.75%
• Key tenants in market: Strong CVS, Walgreens, McDonald's, Chipotle presence
• Challenge: Minnesota has higher state tax burden than other Midwest markets — relevant for investors calculating after-tax returns on properties held in Minnesota
• Strength: Deep buyer pool at disposition — institutional buyers actively acquire Minneapolis NNN assets

Chicago, IL: The Institutional NNN Market

Chicago is a genuinely different market than the rest of the Midwest — it trades more like a coastal gateway city than a Midwest secondary market. NNN cap rates in prime Chicago suburban corridors (Naperville, Schaumburg, Oak Brook) can be as tight as 4.75%–5.50% for premium tenants, reflecting institutional demand and proximity to Chicago's massive investment community.

• Typical NNN cap rates: 4.75%–6.25% (wide range by submarket)
• Investor profile: Both institutional buyers and private investors compete — large deal flow creates liquidity
• Challenge: Illinois property tax environment is among the highest in the nation — a material consideration for NNN investors, particularly in deals with landlord tax obligations

Cap Rate Comparison: Midwest vs. Sunbelt vs. Coastal

To quantify the yield premium investors capture by selecting Midwest markets, here's a representative comparison for a Dollar General NNN with 10 years remaining on the primary term:

• California / Pacific Coast: 5.75%–6.25%
• Florida / Texas Sunbelt: 5.50%–6.50%
• Midwest secondary (Indianapolis, Columbus): 6.25%–7.25%
• Midwest tertiary: 7.00%–8.00%

The 75–125 basis point spread between Sunbelt and Midwest markets represents real money. On a $2M investment, 100bps is $20,000 per year in additional NOI — and the Dollar General paying the rent is the exact same corporate entity, backed by the same balance sheet, regardless of state.

What to Watch in Midwest NNN Markets in 2025

Several trends are shaping Midwest NNN investing this year:

• Dollar store expansion continues: Dollar General and Dollar Tree continue actively opening new stores across Midwest suburban and rural markets, creating a pipeline of new-construction NNN inventory
• QSR drive-thru construction resurgent: McDonald's, Starbucks, Taco Bell, and Chick-fil-A are all actively developing new Midwest locations — new construction NNN development deals are available for investors willing to engage during the development phase
• Rate sensitivity: Midwest cap rates have been relatively stable through the Fed rate cycle, as the yield premium over coastal markets has insulated them from the cap rate compression/expansion volatility seen in tighter markets