The triple-net lease has long been the foundation of retail real estate. Brands commit to a location, developers build to suit, and the economics are meant to benefit everyone. But in 2026, that model is unraveling, and if brands and developers don’t adapt together, expansion plans will come to a halt.
The main issue is a timing mismatch that the traditional NNN structure was never meant to manage.
The Gap Between Lease Signing and Opening Day
Here’s the reality that brands often overlook: a lease may be signed today, but a new location might not open for two to three years. Entitlements take time, permits get delayed, and construction costs fluctuate. From the moment the ink hits the paper to when the first customer walks in, the world has often changed, sometimes quite significantly.
Many brands still negotiate NNN costs with a fixed mindset, trying to cap expenses at lease signing as if those numbers will stay the same through years of entitlement, permitting, and construction. That approach made sense in a more stable cost climate. Now, it causes a structural problem that could make the economics of new development unfeasible.
Developers Are Facing Real Cost Uncertainty
Most developers aren’t being difficult when they push back on hard NNN caps, they’re being transparent about conditions on the ground.
Insurance premiums have increased in many markets. Construction labor costs remain high and unpredictable. Material prices continue to fluctuate due to supply chain disruptions and tariff risks. When a developer agrees to build a project at a fixed cost, only to see expenses rise 20 to 30 percent before construction even starts, something has to give. Either the deal becomes unviable, or the developer walks away.
Neither outcome helps brands grow.
Rigid NNN Terms Are Slowing Expansion
When brands insist on fixed NNN caps that don’t consider the realities of development timelines, they unintentionally make themselves more difficult to build for. Developers have options. Capital flows toward deals that are financially sensible. If a brand’s lease terms don’t allow for cost recovery in a rising-expense environment, that brand drops to the bottom of the priority list.
The brands that are successfully executing aggressive growth strategies in 2026 are the ones willing to have a different conversation, one focused on partnership rather than protection. They are entering lease negotiations with an understanding that:
- The lease signed today reflects conditions that will not exist at delivery
- Developers absorbing all cost uncertainty will demand higher rents or decline the deal entirely
- Flexibility in lease structure is not a concession; it’s an investment in their own expansion
Brands that refuse to adapt are seeing their site pipelines dwindle, not because good locations are unavailable, but because the deal structures don’t work for those who develop them.
What Flexible NNN Structures Actually Look Like
Flexibility doesn’t mean brands abandon cost controls. It means structuring leases in a way that acknowledges the realities of development timelines and cost fluctuations. Practical approaches include:
- Index-linked NNN adjustments that tie expense caps to CPI or construction cost indices rather than fixed dollar amounts
- Open-book development agreements where brands have full visibility into cost drivers and share in the risk of major variances
- Defined NNN reset provisions at delivery that reflect actual stabilized operating costs, not underwriting assumptions made years earlier
- Expense caps that apply only to controllable costs, not insurance or taxes, which are genuinely outside developer control
These structures shield brands from unlimited exposure while allowing developers enough flexibility to make the numbers work, which is essential for closing the deal.
Growth Requires Partnership, Not Just Protection
The brands that will succeed in the next decade of retail growth are those that treat real estate relationships as true partnerships. Developers openly discuss rising costs and market uncertainty, and that transparency actually indicates a healthy working relationship. The question is whether brands are willing to respond to that openness with flexibility.
A brand that insists on locking in NNN costs at signing, refuses to adjust for entitlement delays, and treats developers as cost centers rather than partners will find it increasingly difficult to achieve growth. Conversely, a brand that engages collaboratively, sharing information, establishing reasonable cost adjustment mechanisms, and viewing the developer’s economics as part of its own expansion strategy, will find developers eager to prioritize their projects.
The math is simple: if the deal doesn’t work for the developer, the location doesn’t get built. And if the location isn’t built, the brand doesn’t grow.
What This Means for Brands Planning Expansion
For any brand with a serious growth plan in 2026, the NNN discussion needs to begin earlier and delve deeper. Real estate teams should be asking not just what the NNN number is, but how it was underwritten, what assumptions are included, and how the structure holds up if entitlements take an extra 12 months or construction costs increase by 15 percent.
Brands that are successfully expanding are approaching this differently. They are:
- Engaging developers earlier in the site selection process to understand true cost exposure before signing
- Building schedule contingencies into their expansion models that account for entitlement and permitting timelines
- Accepting reasonable NNN cost adjustment mechanisms in exchange for the developer’s commitment to deliver on the timeline
- Treating NNN negotiations as a shared financial planning exercise rather than an adversarial cost battle
The Bottom Line
The NNN lease isn’t the issue. The problem is using a fixed structure in a constantly changing development environment and expecting it to yield the same results as a decade ago.
Entitlements take time. Permits get delayed. Costs fluctuate. Any brand aiming to grow in today’s environment must consider all of these factors, not by abandoning cost discipline, but by building the right kind of flexibility into its lease structures that makes the deal viable from the developer’s side.
Developers are generally willing to be transparent partners in this conversation. The brands that come prepared to engage with that mindset, to share risk wisely rather than avoid it completely, are the ones that will keep their pipelines moving.
In 2026, growth isn’t just a real estate strategy. It’s a partnership approach.
The brands that understand this will grow. Those that don’t will wonder why their pipeline has stalled.
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