Searching for Yield: Multi-Tenant Retail Offers Net Lease Investors Attractive Opportunities

Multiple tenants can mitigate risk and allow more frequent rent increases for investors.

In the past few years, we’ve seen an uptick in private investors that were focused solely on single-tenant retail branch out and expand into multi-tenant product at a more rapid pace as they chase yields. It’s seemingly a natural progression, but prior to about 2015, it was perhaps a bit less common for the private investor segment.

As it relates to retail assets specifically, familiarity is why most investors can make the transition from single-tenant to multi-tenant with confidence—the general rules apply to both product types. Of course, there are nuances that will play a role, but if one understands retail and the economic drivers of a location, the investor has a solid foundation to build from and they’ll be able to expand their focus successfully.

By acquiring multi-tenant retail assets, investors can enjoy better yields and diversification wrapped up into one investment. Not only can they mitigate the risk if one tenant happens to vacate or go out of business, but lease terms are often shorter in multi-tenant properties, which may offer an opportunity to push rents higher or replace them altogether.

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