Over the past several years, the single-tenant property market has gained a lot of momentum. It has for good reason. There are many advantages such as ease of accounting, management, underwriting, and predictability of cash flow. Many investors perceive that the risk is much lower with the typical long-term leases associated with the single-tenant market.
However, many investors who follow the single-tenant trend might be missing an opportunity that actually fits their investment objectives a little better. Multi-tenant properties often times can provide higher returns and in many cases less risk than their single-tenant competitors. Some of those advantages include:
With those advantages being stated, an investor also must mitigate those disadvantages associated with this type of investment which create those opportunities. Those include more intensive management with more leases to administer, more responsibility for physical property maintenance, and tenant rollover. These can typically be mitigated through competant 3rd party management but they are concerns nonetheless.
I am of the opinion that no one property type is best for all investors. There are advantages to both single-tenant and multi-tenant properties considered here. I do believe however, that there is wisdom in considering the alternative when the majority seems to be going one direction or the other.