A guide to single-tenant vs multi-tenant commercial real estate (FAQs answered)

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There are several criteria you must evaluate when investing in commercial real estate, but you can maximize your profitability by consciously aligning the type of property with your investment goals. One of the first decisions you will need to make is whether to invest in single-tenant or multi-tenant real estate. Let’s review the differences between the lease structures for these types of properties. 

 

A single-tenant lease documents a rental agreement between a sole lessee and the lessor of a property, whereas a multi-tenant lease encompasses multiple lessees in a larger, multi-unit property. Often, lessors choose to manage multiple separate leases—one per unit or tenant in a multi-tenant property. 
 
While multi-tenant real estate can be rented via a gross or net lease, single-tenant properties are most commonly rented via an absolute triple net (NNN) lease. NNN leases require the tenant to take responsibility for rent, taxes, insurance, common area maintenance, capital expenditures, and all other property maintenance costs.  

Common examples of single-tenant properties include: 

  • Pharmacies 
  • Gas stations 
  • Fast-food restaurants and drive-thrus 
  • Warehouse and distribution centres 
  • Industrial and manufacturing plants 

Common examples of multi-tenant properties include: 

  • Office centres 
  • Shopping malls 
  • Industrial warehouses 
  • Healthcare centres 
  • Apartment complexes 

Read the full blog for an in-depth look at the pros and cons of single-tenant and multi-tenant commercial real estate. 

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