What is the risk in single-tenant industrial assets, and how do you manage it?
The risk in a single-tenant industrial asset is that occupancy is all or nothing: one tenant's decision or failure takes the income from full to zero, and the landlord then carries the outgoings until a new tenant pays. Funds manage it by underwriting the covenant and the building's re-lettability, watching the tenant's credit and lease events, renewing early, and preparing the re-let before the lease ends. Scayled handles the re-let. For a single-let building that is vacant or coming back, it finds 250 to 350 businesses the building suits and the person who signs at each.
- Why is a single-tenant industrial asset riskier than a multi-let one?
- What should you check before buying a single-let industrial asset?
- How do you watch the tenant during the hold?
- When should you start planning for the lease end?
- How do you re-let a large single-let building quickly?
- What does Scayled cost?
Why is a single-tenant industrial asset riskier than a multi-let one?
In a multi-let estate, one departure removes a fraction of the income. In a single-let building, one departure removes all of it, and on a net lease the landlord immediately picks up property taxes or business rates, insurance, security and maintenance on the whole building.
Value moves the same way. A single-let asset is priced largely on one covenant and one unexpired term, so a weakening tenant or a lease nearing its end affects the value of the whole asset at once.
What should you check before buying a single-let industrial asset?
The covenant (the entity on the lease, its accounts, rent cover, and any guarantor), the unexpired term to expiry and to any break, and whether the rent is above or below market. An over-rented building is exposed at expiry even if the tenant stays.
Then the building: is it a standard specification that many occupiers could use, or highly specialised for this tenant? Check clear height, power, yard depth, dock doors, energy rating and location, and how many businesses in the market could realistically occupy a building of that size.
How do you watch the tenant during the hold?
With one tenant carrying the whole income, its credit file deserves daily attention: Creditsafe, Dun & Bradstreet and Experian will flag a falling score, late filings, a court judgment or a change of directors. If the tenant is listed, CreditRiskMonitor's FRISK score adds a bankruptcy estimate, and MSCI's Income Analytics puts a figure on the income at risk. Arrears in Yardi or MRI remain the earliest hard evidence.
Add news alerts on the tenant and its parent, site visits, and regular conversations with the person who decides on property at the tenant. A single-let building needs a closer relationship than one tenant among fifty.
When should you start planning for the lease end?
Early, often two or more years ahead on a large building, because a large occupier planning a move needs that long to secure and fit out an alternative. Open the renewal conversation well before any notice or break date, and ask about the tenant's operational plans, not just the lease.
At the same time decide what the building needs to re-let: refurbishment, energy upgrades, more power or yard, or a split into smaller units if the design allows. Those decisions take time and affect who the next tenant can be.
How do you re-let a large single-let building quickly?
Use every channel at once. An appointed agent brings the requirements on their books, listing portals reach businesses searching now, and a direct approach reaches businesses whose operation the building suits but who are not searching yet.
Speed comes from not waiting for enquiries. Scayled takes a brief on the building, then lists the businesses big enough and suited to occupy it, from neighbours to operators elsewhere in the market, with the decision-maker named and an email drafted for each. For a big box the pool may be smaller than 250 to 350, and Scayled says so before payment if the market cannot support the number.
What does Scayled cost?
A single-let building is one vacancy, and The Campaign is priced that way: US$749 for the Full list of 250 to 350 businesses, delivered in about five working days, paid once with no subscription and no commission on the letting. Smaller single-let units can start with Focused, the strongest 100 to 150, from US$449. The emails are written as the owner and run alongside the appointed agent.
Scayled does not monitor tenants or score covenants; it is the action taken when the building is empty or coming back. Where the owner is letting it directly, finding a tenant for a vacant industrial unit covers the rest of the process.
Lease The Vacancy In-House, Before You Appoint An Agent.
The Campaign finds the 250 to 350 businesses the building suits, names the person who decides at each and writes every email, ready in about five days. One payment of US$749 per property, no commission and no subscription. A focused 100 to 150 from US$449.