Investment sales brokers are reporting heightened year-end transaction activity as buyers pursue bonus depreciation benefits before 2025 closes. Recent federal legislation has restored 100% bonus depreciation for specific commercial real estate categories, including automotive-related properties, creating a tax-driven urgency rather than market timing motivation.
Brittany Megrath, CCIM and principal of M Square Commercial, explains that tax strategy is currently driving investment decisions. "Right now, the end of the year is a very busy time because a lot of people are trying to take advantage of depreciation on new purchases," Megrath says. "It's all about taxes right now for the investment sales deal. This is a great time for developers to sell their assets, because the investors on the other end are trying to place money in different categories."
The bonus depreciation provision, which had gradually declined from 100% to 40% over previous years, returned to full strength under recent federal policy. The restoration applies particularly to automotive asset classes, including car washes and quick-lube facilities, redirecting investor attention toward properties offering immediate tax benefits alongside operational returns.
Quick-lube facilities represent what Megrath characterizes as underappreciated opportunities within the single-tenant net lease market. "I like the Quick-Lube asset class. I think it operates a little undercover," Megrath notes. "They're fairly small, so they can fit into small spaces, and there are a lot of corporate tenants that are actively expanding in the quick lube space." These properties require smaller footprints than traditional automotive uses, enabling development on constrained parcels while benefiting from the same 100% bonus depreciation treatment as larger automotive facilities.
The 2025 market presented execution challenges across commercial real estate, with M Square's site selection and development advisory work revealing persistent friction in deal completion. "2025 was a fairly slow-moving year," Megrath says. "A lot of deals took a lot of effort and massaging to get across the finish line. This was a year of having to get creative, people having to turn to private lenders versus institutional lenders." Developers working through 2025 market conditions increasingly turned to private lending when institutional financing proved too restrictive or slow.
Looking toward 2026, 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. "As interest rates continue to go down, we are going to see some people get a little bit more excited about investing," Megrath says. "CDs and those interest rates that have been easy for people to acquire are now coming down, and it's going to force people to invest more into these single-tenant net lease assets." Properties offering 6-7% returns may regain investor attention as Treasury yields and CD rates decline.
Small-footprint tenants across coffee and quick-service categories are expected to maintain expansion programs through 2026 despite financing market challenges. "They're still focused on growth," Megrath notes. "Tenants are going to find a way. They're committed to their operations and their growth." Banking sector behavior will influence transaction velocity, with institutional lenders who reduced commercial real estate exposure during recent uncertainty facing decisions about re-engagement with borrowers.
M Square Commercial anticipates facilitating 30-40 transactions annually across target markets in the Southeast and Mid-Atlantic regions, focusing on beverage, automotive, and quick-service retail categories. The company provides site selection and development advisory services for single-tenant net lease properties, with more information available at https://www.msquarecommercial.com.
