Capital has flooded the market over the course of the pandemic, with investors feverishly chasing net lease deals across all asset classes. And while the appetite for those transactions doesn't appear to be waning anytime soon, investors appear to be adjusting their approach and taking a harder look at how long-term net lease deals will pencil.

"This is a very challenging market to predict 18 months out. There is uncertainty on where rates will settle, if we experience a recession and its severity, and the potential for near-term corporate earnings weakness," said Mark West, senior managing director and co-leader of JLL's Capital Markets net lease group. "We expect net-lease investors to be more cautious going forward and to make more defensive investments while avoiding less certain industries and tenants. Underwriting will be more measured and disciplined for both credit and residual value."

West said JLL believes deal volume will increase as owners gain the perspective that pricing has reset from 2021 highs and as the debt market activity improves. He also expects sale-leaseback activity to increase "because it has become comparatively more attractive capital than in recent years."