Single-Tenant Buildings Are Popular Investments

One-Tenant Buildings Are Popular Investments:
"In recent years, competition for buildings leased to single tenants has heated up as investors fleeing the stock market have sought safer havens for their money and many corporations have been persuaded to sell their buildings and lease them back. With rising unemployment and an average nationwide office vacancy rate of 16.5 percent, buildings with long-term high-quality tenants have become more appealing, both to publicly traded investment companies and private individuals.

According to Real Capital Analytics, a New York research company, $2.7 billion in so-called single-tenant property valued at $5 million or more changed hands in the second quarter of this year, an increase of 40 percent over the sales volume of the second quarter of 2001.

In the largest deal last quarter, a German-financed real estate fund, Jamestown, paid $297 million for 1745 Broadway, near 56th Street, a new Midtown building with 645,000 square feet of offices that are fully leased for 15 years to the publishing company Random House, a subsidiary of Bertelsmann. (The deal did not include the building's 25 floors of residential condominiums.)

And many more single-tenant properties with long-term leases are waiting to be tapped, said Mr. Ralston, whose company owns $1 billion in property. 'This is possibly the largest undiscovered niche in real estate today,' he said." Sphere: Related Content