Delaware Statutory Trust offerings exist across most of the institutional real-estate spectrum. A 1031 investor identifying a DST is not picking a single asset class — they are picking a sector, a sponsor, and a hold-period thesis. The four sectors below cover the majority of typical offerings; specialty sectors (medical office, student housing, senior living, data centers) appear less consistently.
Multifamily
Multifamily — garden-style apartments, mid-rise, and increasingly build-to-rent single-family rentals — is the largest property type by deal volume in the DST market. Suburban Sun Belt portfolios in Texas, Florida, Georgia, and Arizona have dominated sponsor inventory for most of the last decade.
What drives the income. Rents reset on each lease renewal, typically annually. In a tightening rental market, rents grow ahead of contractual schedules; in a softening market, rents stagnate or fall. Distributable cashflow follows operating cashflow, which follows occupancy and rent growth at the property level.
What to underwrite. Submarket fundamentals (job growth, household formation, supply pipeline), the sponsor's operating platform, current occupancy versus offering pro forma, and the assumed exit cap rate. A DST sponsor that underwrote a 2021-era acquisition at compressed cap rates and floating-rate debt may be running into refinancing pressure today.
Depreciation. Residential property depreciates over 27.5 years, faster than the 39-year schedule for non-residential commercial property. Investors with significant ordinary income against which to offset depreciation losses sometimes lean toward multifamily for that reason — but the DST seven-prohibition rules limit how much active depreciation strategy an investor can actually pursue.
Industrial
Industrial — last-mile distribution, e-commerce fulfillment, light manufacturing, cold storage — has been the strongest-performing institutional sector over the post-2020 period and remains a meaningful share of DST inventory.
What drives the income. Most industrial DSTs hold single-tenant or small-tenant-roster buildings with long leases (often 7 to 15 years) and contractual rent escalations of 2% to 3% annually. The income profile is closer to than to multifamily — predictable, contractual, with limited annual variability.
What to underwrite. Tenant credit, remaining lease term, market rent versus in-place rent (the "mark-to-market" risk at lease expiration), and the property's functional adequacy for next-generation industrial use (clear heights, dock doors, trailer parking, power capacity). A 25-year-old infill warehouse can have terrific in-place economics and meaningful obsolescence risk.
Net-lease (single-tenant retail, office, medical)
A single-tenant DST holds one or several properties leased to a single tenant — typically a creditworthy retail, office, or medical operator — under a long lease that shifts taxes, insurance, and maintenance obligations to the tenant. Common DST net-lease tenants include drug-store chains, dollar-store operators, fast-casual restaurants, and investment-grade medical-office occupants.
What drives the income. Contractual rent and the tenant's ability to pay. For the full lease term, the income is fixed (or escalating on a fixed schedule). The risk is binary: the tenant pays, or they default. Unlike a multifamily building where partial vacancy reduces income, a single-tenant net-lease property either generates full rent or generates nothing.
What to underwrite. Tenant credit rating, remaining lease term, the sponsor's view on lease renewal at expiration, and the exit-cap-rate assumption. Net-lease cap rates compress sharply for the highest-credit tenants and widen for sub-investment-grade or non-rated tenants. A DST holding a portfolio of dollar-store buildings is a different risk profile from one holding a Walgreens ground lease.
The takeaway: net-lease as a DST property type is fine. Net-lease as the primary research lens for the entire 1031 question is too narrow. It is one of four mainstream DST sectors, not the whole market.
Self-storage
Self-storage is the smaller of the four mainstream sectors but has historically delivered some of the most resilient operating performance across cycles. Demand is driven by life events — moves, marriages, deaths, downsizing — rather than by macro consumer spending.
What drives the income. Tenants on month-to-month leases at unit-level rents. Rental rates reset frequently and respond quickly to local supply conditions. Self-storage operators with revenue-management systems can push existing-customer rents materially during a hold period.
What to underwrite. Local supply (a new facility opening within a 3-mile radius can compress rents quickly), the sponsor's revenue-management platform, the property's exposure to climate-controlled units versus standard drive-up units, and the assumed stabilized occupancy.
How to think about sector choice
Three honest questions:
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What is your current portfolio exposure? A 1031 investor whose relinquished property was multifamily may want a non-multifamily DST for diversification. An investor whose entire net worth is in residential rentals may want exposure to industrial or net-lease as a deliberate sector shift.
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What is your view on inflation and rate sensitivity? Multifamily and self-storage reset rents quickly; net-lease and longer-lease industrial do not. In a high-inflation environment, the short-duration sectors have an advantage. In a deflationary environment, the contractual sectors do.
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What is your hold-period preference? Industrial and net-lease DSTs are often structured around the underlying lease term — a 10-year lease maps to a 7- to 10-year sponsor hold. Multifamily and self-storage hold periods are sponsor-determined and tend to be shorter (5 to 7 years), with the sponsor selling into the market when fundamentals or capital markets favor an exit.
The right DST for a given exchange is rarely the one with the highest headline distribution rate. It is the one whose sector exposure, sponsor track record, and stated exit thesis fit the rest of your portfolio and the rest of your tax planning.
This article is for educational purposes only and does not constitute investment, tax, or legal advice. Consult your own tax, legal, and financial advisors before making any investment decision.