Sell Your Warehouse and Stay: How a Sale-Leaseback Works

This page is for owners who run a business in a building they own and want to turn the building into cash without moving. Think of a manufacturer funding new equipment, a distributor paying down debt or an owner getting ready to retire. It covers how a sale-leaseback works, what the lease needs to settle, and the Pennsylvania and New Jersey rules that apply.

We buy warehouses and industrial buildings across Philadelphia and South Jersey, including through sale-leasebacks. We're part of a family-owned business that has been operating for over 15 years. Rent and lease terms are worked out deal by deal, so nothing on this page is an offer of particular terms.

How does a sale-leaseback work on a warehouse?

In a sale-leaseback, the owner of a warehouse or plant sells the building and signs a lease to keep using it. The business stays in place, and the equity in the building becomes cash at closing. When you sell to Direct Warehouse Buyers this way, the lease terms are written into the deal, so you know them before you sign the sale.

The steps follow an ordinary sale, with one addition. We walk the building, you share what's needed to price it, and the written offer covers the purchase and the lease together. Due diligence and closing run as they would on any sale. At closing, the deed transfers, the lease starts, and you move from owner to tenant without moving a single pallet.

Sometimes the building is owned by one company and the business is run by another, such as a real estate LLC that rents to the operating company. In that case the property company sells, and the operating company signs the lease.

Why do owners sell their building and lease it back?

Owners do sale-leasebacks to turn the equity in a building into cash while the business stays put. The money can pay down debt, fund equipment or growth, or prepare for a retirement or a sale of the company, without the cost and disruption of moving. The trade-off is that the business becomes a tenant and pays rent instead of owning.

SLB Capital Advisors, an advisory firm that tracks sale-leasebacks, counted 714 U.S. sale-leaseback transactions in 2025, with dollar volume up 18% from the year before to about $14.4 billion.

A sale-leaseback also fixes a date and a price for the real estate while the business keeps its routine. That can help when an owner wants to separate the building from the company before handing the business to family or selling it. Our page on retiring or selling the business covers those exits.

Sale-leaseback compared with a refinance or a move

A cash-out refinance keeps the building but adds debt, and the amount a lender will advance depends on its appraisal and its terms. If a loan on the building is coming due, our page on a loan coming due compares refinancing with selling. A sale-leaseback turns the equity into cash without a new loan, in exchange for rent. Which one leaves the business better off is a question for your accountant, because it depends on the rent, the loan terms and your plans for the business.

How do the rent and the price fit together in a sale-leaseback?

In a sale-leaseback, the price and the rent are negotiated together, because a buyer weighs the rent and the lease terms when it prices a leased building. The two numbers affect each other. Both go into the written deal at the same time, so you can see the trade-off.

Asking rents give a rough idea of the market. In the third quarter of 2026, Cushman & Wakefield's regional average net asking rent was $12.97 per square foot a year for warehouse and distribution space. For manufacturing space, it was $9.52. Your building's rent depends on its own size, condition and location, so treat those averages as background.

The lease length cuts both ways. A long lease gives your business security in the building. It also commits the business to the rent for that long. A shorter lease commits it for less time, which can suit an owner who plans to move or sell the company.

What does a sale-leaseback lease need to cover?

A sale-leaseback lease needs to settle the term, any renewal options and the rent, including how it changes. It also says who pays property taxes, insurance and repairs, including the roof and structure. It should also cover subletting, early exit, what equipment you can remove at the end, and who handles environmental matters during the lease. All of it goes into the written deal.

• Term and renewals: how long the lease runs and whether you can extend it
• Rent: the starting rent and how it changes over the term
• Expenses: who pays the property taxes, insurance and upkeep, and who replaces the roof or repaves the lot
• Use and changes: what the business can do in the space, and what alterations need approval
• Subletting and transfers: whether a buyer of your business could take over the lease
• Early exit: whether the lease can end early, and on what terms
• The end of the lease: what equipment and fixtures you can remove, and the condition the space has to be left in
• Environmental matters: who handles compliance during the lease, and how conditions from before the sale are treated

If you might sell the business later, the subletting and transfer terms matter most. A business buyer will want to know it can stay in the building. The lease should say whether and how it can pass to a new owner of the company.

Which Pennsylvania and New Jersey rules apply to a sale-leaseback?

A sale-leaseback transfers the deed, so the usual transfer taxes apply: Pennsylvania's state and local realty transfer tax, 4.578% in Philadelphia, or New Jersey's seller-paid Realty Transfer Fee. In New Jersey, the state must receive the buyer's bulk sale notice at least 10 business days before closing. The sale can also trigger ISRA when a covered business operates in the building, even though it stays.

New Jersey and ISRA

ISRA counts a sale of the real property where a covered industrial business operates as a change in ownership. The business staying as a tenant doesn't change that: the owner or operator still has five days after signing the sale agreement to notify New Jersey's Department of Environmental Protection. Whether ISRA covers your business depends on its type of business, when it operated and what its operations involved. Our ISRA guide sets out which businesses ISRA covers and the steps.

Pennsylvania transfer tax on the lease

Pennsylvania's realty transfer tax rules generally leave leases out, but not all of them. Among the exceptions is a lease with a term of 30 years or more. Renewal options count toward the term when their rent is fixed or set by a formula. The same rules have a separate section for sale-leaseback transactions, and Philadelphia lists long-term leases of 30 or more years among the documents it taxes. Whatever the lease length, ask the title company how your lease will be treated.

Our cost guide has Pennsylvania transfer tax rates by county and town and how New Jersey's fees depend on the tax class.

Tax and accounting questions

How a sale-leaseback is taxed depends on its terms, so it's a question for your accountant. When it's treated as a sale, the gain is figured as on any building sale, and our seller's guide covers the federal, Pennsylvania and New Jersey taxes involved. After closing, the business pays rent instead of owning, and your accountant can tell you how that rent is treated on your returns.

Accounting can trip up a sale-leaseback. Under U.S. accounting rules (ASC 842), the deal counts as a sale only if control of the building passes to the buyer. The transaction is accounted for as a financing instead if the leaseback is classified as a finance lease. The same goes if the seller keeps an option to buy back the real estate, whatever the option price. If your company's financial statements matter to its lenders or investors, settle the accounting with your accountant before you sign.

What to have ready

• The deed, a recent tax bill and any survey or site plan
• The building's basic specs: size, clear height, docks and power
• Roof, paving and system records
• Environmental reports and tank records
• How long you'd like to stay, and any plans to sell the business
• The operating company's financial statements, which a buyer looks at to understand its tenant. We'll sign a nondisclosure agreement before you share them, if you'd like.

Doing a sale-leaseback with us

Send the address and tell us how long you'd like to stay. We'll walk the building with you, and our written offer covers the price, the lease and which costs each side pays, so you can weigh the whole deal at once. We charge no commission and no fees.

We can't promise a set number of days. When you sell to us, you choose the date, within the required steps and the due diligence period in our offer. How It Works covers each step from the first call to closing. Related situations: a loan coming due, retiring or selling the business and tenants in place. Running a plant? Our page on selling a manufacturing plant covers its permits and machinery. Running a cold storage operation? Our what we buy page covers selling cold storage as real estate.