Why NNN Investors Prefer Missouri State: Higher Growth & Competitive Cap Rates Explained
Future Holding for NNN Property Investments in Missouri
Triple Net Lease (NNN) properties—where tenants are responsible for property taxes, insurance, and maintenance—are an increasingly attractive investment option for those seeking reliable income with minimal landlord responsibilities. In Missouri, the future for NNN property investments is strong, bolstered by a blend of economic stability, growing markets, and favorable investment conditions.
1. Economic and Population Growth
Missouri’s economy continues to diversify and expand, with strong performance in sectors like manufacturing, logistics, healthcare, and technology. Key cities such as St. Louis, Kansas City, Springfield, and Columbia are experiencing steady population and job growth, creating consistent demand for commercial real estate. This economic momentum supports the long-term viability of NNN properties throughout the state.
2. Stability and Demand for NNN Properties
NNN properties in Missouri offer dependable, long-term returns due to the lease structure that minimizes landlord responsibilities. The state’s stable real estate market and pro-business environment contribute to sustained demand among both tenants and investors. Retail, industrial, and healthcare-related NNN assets remain especially popular due to their resilience and essential-service nature.
3. Market Trends and Cap Rates
Missouri offers competitive cap rates—often in the 6% to 7.5% range—making it a favorable market for yield-driven investors. As interest rates and inflation impact investment behavior nationally, many buyers are turning to Midwest markets like Missouri, where prices remain more accessible and returns are attractive. The market is also seeing increased inventory of NNN properties, offering investors greater choice and negotiation leverage.
4. Financing Considerations for NNN Investors
To invest in NNN properties in Missouri, investors typically need a net worth of at least $1 million or annual income above $200,000. Down payments often range from 30% to 40% of the property’s purchase price. Missouri’s relatively low property tax rates and cost of living also enhance the value proposition, especially for out-of-state investors using 1031 exchanges to maximize tax deferral.
5. Local Market Opportunities
Missouri presents numerous NNN investment opportunities across urban and suburban corridors. For instance, single-tenant retail properties in Kansas City or St. Louis suburbs with long-term leases and annual rent escalations are attractive to investors seeking passive income. Industrial properties near major interstates and distribution hubs are also in demand, thanks to Missouri’s central U.S. location and strong transportation infrastructure.
Triple-net (NNN) investors are increasingly turning to Missouri as a prime location for net lease properties, thanks to its strong cap rates, central U.S. location, economic resilience, and investor-friendly environment. Here’s why NNN brokers and investors see Missouri as a lucrative and growing market:
1. Competitive Cap Rates with Strong Return Potential
Missouri offers competitive cap rates, typically ranging from 6% to 7.5%, which are higher than those found in many coastal or high-demand markets. These cap rates provide NNN investors with the opportunity to generate strong cash flow and long-term returns, especially in stable sectors like healthcare, logistics, and retail.
2. Affordable Commercial Real Estate
The affordable property prices in Missouri, especially compared to states with overheated real estate markets, make it easier for investors to enter the market or scale their portfolios. Whether investing in urban centers like Kansas City and St. Louis or in growing mid-size markets like Columbia and Springfield, NNN investors can secure high-quality assets at reasonable valuations.
3. Economic Growth & Population Stability
Missouri enjoys a diversified economy, with strong performance in industries such as transportation, manufacturing, biosciences, and financial services. Cities like Kansas City, St. Louis, and Springfield continue to experience growth in population and employment. This trend increases demand for retail and service-based commercial real estate, making the state fertile ground for net lease opportunities.
4. High Demand for Essential Retail & QSR Tenants
There is strong demand for essential retail and quick-service restaurant (QSR) properties throughout Missouri. Brands like Dollar General, Walgreens, Starbucks, McDonald’s, and Taco Bell are expanding or maintaining a strong presence in both urban and rural markets. These tenants provide long-term leases and predictable income—ideal for NNN investors seeking stability and minimal management.
5. Tax Advantages for Real Estate Investors
Missouri offers several tax advantages for real estate investors, including competitive corporate and personal income tax rates and favorable treatment of capital gains under certain conditions. While not tax-free, the state’s balanced tax climate allows investors to retain more of their income while benefiting from steady market appreciation and depreciation incentives.
6. Central Location & Industrial Expansion
Missouri’s strategic central location and robust infrastructure make it a logistics and transportation hub. The state is home to major interstates, river ports, and rail connections, making it attractive for distribution centers and industrial tenants. Growth in the industrial and e-commerce sectors has increased demand for NNN-leased industrial and flex space, especially in cities like St. Louis and Kansas City.
Income Taxes
Missouri’s Tax Advantages for NNN Investors: A Strategic Choice for Net Lease Properties
Missouri presents a favorable tax environment that appeals to NNN (Triple Net Lease) investors seeking to maximize returns while minimizing tax burdens. With balanced income tax rates, competitive corporate taxation, and no estate or inheritance taxes, Missouri offers meaningful financial advantages for those investing in net lease properties. Here’s why NNN investors and brokers are looking to Missouri as a smart long-term investment market:
1. No State Tax on Passive LLC Income (with Proper Structuring)
While Missouri does not explicitly exempt passive LLC income, income passed through an LLC to members is taxed at the individual level, not the entity level. With proper structuring, real estate investors can benefit from flow-through taxation, allowing them to deduct business-related expenses and potentially reduce taxable income. This pass-through structure can be a tax-efficient vehicle for NNN investors.
2. Competitive Corporate Income Tax Rate
Missouri’s corporate income tax rate is a flat 4.0%, one of the lowest in the nation. This low rate makes Missouri highly attractive for investors operating through corporate entities, enabling them to retain a greater share of earnings for reinvestment, acquisition, or portfolio expansion.
3. Moderate and Flattened Personal Income Tax Rates
Missouri recently restructured its personal income tax system, reducing rates and simplifying brackets:
Top marginal rate: 4.8% (as of 2024)
Lower rates apply for smaller income brackets
These rates are well below those of high-tax states and provide a favorable environment for individuals earning rental income through NNN investments or pass-through entities.
4. No Estate or Inheritance Tax
Missouri imposes no state-level estate tax or inheritance tax, making it easier for investors to plan generational wealth transfer. This allows real estate assets—including NNN properties—to be passed to heirs without additional state-level tax burdens, preserving the long-term value of investment portfolios.
5. Reasonable Property Tax Rates
Missouri has moderate property tax rates, with an average effective property tax rate of approximately 0.88%. While higher than some low-tax states, this rate remains significantly below the national average in high-cost states. For NNN investors, these manageable holding costs contribute to better long-term yield and cash flow stability.
6. Capital Gains Tax Aligned with Income Tax
Missouri does not have a separate capital gains tax. Capital gains are taxed as ordinary income, subject to the state’s personal income tax rate (up to 4.8%). This structure simplifies tax planning for NNN investors executing 1031 exchanges, managing exit strategies, or realizing appreciation on property sales.
Investing in triple-net lease (NNN) properties in Missouri is an increasingly compelling strategy, especially in counties and metro areas experiencing robust economic development and population growth. Tenants cover property taxes, insurance, and maintenance under NNN leases—offering investors a set-it-and-forget-it model. Based on recent data, here are the most promising locations:
1. Jackson County (Kansas City MSA):
Population Growth: Kansas City metro added 24,817 people in 2024, including ~8,048 in KC proper, accounting for over one-third of metro growth
Economic Development: Expanding urban core, industrial parks, and distribution centers.
Investment Potential: Strong demand for NNN properties in retail, QSRs, and logistics facilities—driven by population influx and urban revitalization efforts.
2. St. Charles County (St. Louis Suburbs):
Population Growth: One of Missouri’s wealthiest and fastest-growing counties, with significant expected in-migration throughout the 2020–2030 period.
Economic Development: Suburban expansion, robust family housing, retail, and office growth.
Investment Potential: Ideal for NNN retail centers, quick-service restaurants, and healthcare-related facilities catering to affluent suburbs.
3. Boone County (Columbia):
Population Growth: Columbia, the #4 city in Missouri, is the fastest-growing municipality, growing ~40% since 2000, with 2024 population ≈130,900
Economic Development: Anchored by the University of Missouri, major educational institutions, medical research, and government services.
Investment Potential: Stable demand for NNN properties in multifamily adjacent retail, office space, and medical/educational services.
4. Christian County (Springfield MSA):
Population Growth: Noted as the fastest-growing county in Missouri circa 2010 due to Springfield’s suburban expansion.
Economic Development: Growth in housing, retail hubs, and healthcare services linked to Springfield’s broader economy.
Investment Potential: Attractive for NNN retail centers, banking branches, and service stations in growing commuter communities.
5. Cass County (Raymore area, KC suburb):
Population Growth: Raymore saw a 4.7% increase from July 2022 to July 2023, making it Missouri’s fastest-growing city
Economic Development: A Kansas City suburb with rising housing and commercial investment.
Investment Potential: Ideal for NNN investments in grocery-anchored centers, QSRs, and essential-service outlets supporting new neighborhoods.
Pros:
1️⃣ Higher Cap Rates
Missouri offers competitive cap rates in the 6%–7.5% range, which are often higher than those found in coastal markets. This allows investors to achieve strong cash flow and better overall returns, particularly in suburban and secondary markets.
2️⃣ Balanced Tax Environment
Missouri provides a moderate income tax structure, with a flat corporate tax rate of 4.0% and a top personal income tax rate of 4.8%. The absence of estate and inheritance taxes also makes it attractive for long-term wealth planning.
3️⃣ Moderate Property Taxes
The average effective property tax rate in Missouri is around 0.88%, which is lower than many high-tax states. This helps investors reduce ongoing holding costs and improve long-term returns.
4️⃣ Affordable Property Prices
Commercial real estate in Missouri remains relatively affordable, especially outside of major metro areas. This affordability allows investors to enter the market with a lower capital outlay and benefit from value-add or appreciation strategies.
5️⃣ Central Location & Logistics Hub
Missouri is strategically located in the heart of the U.S., making it a key hub for logistics and transportation. Cities like St. Louis, Kansas City, and Springfield benefit from strong demand in industrial, retail, and service-oriented sectors.
6️⃣ Growing Suburban Markets
Counties like St. Charles, Christian, and Cass are among the fastest-growing in the state. This suburban growth drives demand for essential retail, QSRs, medical services, and service centers—ideal tenants for NNN properties.
7️⃣ Diverse Economy
Missouri has a broad and resilient economy, with strength in manufacturing, healthcare, education, agriculture, and tech. This diversification supports tenant stability and reduces reliance on any one industry.
Cons:
1️⃣ Moderate Appreciation Rates
While stable, Missouri’s property appreciation rates are typically slower than those in high-growth states like Texas or Florida. Investors seeking rapid appreciation may find limited upside in short-term horizons.
2️⃣ Tenant Demand Varies by Location
Urban areas (St. Louis, Kansas City, Columbia) have strong tenant demand, but rural or declining towns may struggle to attract or retain quality tenants. Investors must assess local market fundamentals before buying.
3️⃣ Weather Risks: Tornado Exposure
Certain regions of Missouri, especially in the central and southern parts, are located in Tornado Alley. This can lead to higher insurance premiums and occasional operational disruptions.
4️⃣ Limited Luxury & High-Density Urban Retail
Missouri’s NNN market tends to favor essential and mid-tier tenants (e.g., Dollar General, Walgreens, and Taco Bell). Investors looking for luxury retail or dense, walkable urban projects may have limited inventory.
5️⃣ Economic Incentives Vary Locally
While Missouri is business-friendly overall, economic incentives and zoning regulations vary widely by city and county. Investors may need to work through inconsistent permitting processes and development support.
Missouri NNN Properties for 1031 Exchange
Invest in Free Standing Single Tenant Triple Net (NNN) Properties in Missouri
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With our in-depth market knowledge and personalized service, we provide tailored investment strategies for both buyers and sellers of commercial real estate. Whether you’re looking to defer capital gains through a 1031 tax-deferred exchange or want to diversify your portfolio with income-generating assets, our team offers a wide selection of vetted NNN investment properties.
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