Why Single-Tenant Net Leases?
Increasingly, developers, investors, and tenants are choosing single-tenant net leases for their unique combination of attractive traits. At STNL Development, we’re passionate advocates of single-tenant net lease development, as our name clearly implies. Why? Here are four key reasons:
1. Stable cash flow
One of the single-tenant net lease’s standout qualities is its stability and low risk. Many tenants in these properties are national or regional businesses with strong credit ratings, reducing the risk of tenant default and ensuring a long-term, consistent stream of income. This stability also creates a relatively liquid market for these properties. Finally, many of these businesses are more resilient during economic recessions due to their necessity (e.g., grocery stores, day cares, and gas stations).
“We’ve found that single-tenant net leases remain the steadiest across all commercial real estate segments,” says Chris Canarie, CEO of STNL Development. “Even with some financial uncertainty, our clients are still jumping at land opportunities we find for them and expanding across new regions.”
2. Tenant responsibilities
Single-tenant net lease properties typically offer long-term leases, ranging from 10 to 20 years. They are typically in desirable locations, which is excellent for businesses that want to stay in an area and reach as many customers as possible. Many companies we work with specifically select a city to grow in, allowing us to find the best area for them that suits their needs.
Single-tenant net leases also allow tenants to tailor the space to their operational and brand guidelines. This autonomy gives them more freedom than businesses in a multi-tenant lease. In exchange, the tenants take responsibility for the property expenses, including taxes, insurance, and maintenance, lessening risk and financial uncertainty for investors and landlords.
3. Tax benefits
Like other real estate investments, single-tenant net lease properties offer tax benefits like depreciation, mortgage interest deductions, and eligibility for 1031 or like-kind exchanges. These advantages make the properties appealing for investors looking to scale their portfolios.
4. Sale leasebacks
One of our key services is sale-leaseback opportunities, where we purchase and lease the property back to the company. This structure allows businesses to free up their capital for expansion or other investments while operating from a preferred location.
Interested in learning more?
At STNL Development, we’re single-tenant net lease experts through and through. If you’re interested in developing a new property or want to learn more about us, connect with us on LinkedIn or email us at team@stnldevelopment.com.
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