Selling a Leased Warehouse with the Tenants in Place

This page is for owners selling a warehouse, flex building or plant that has tenants in it. That might be one tenant on a long lease, a multi-tenant building with staggered expirations, or a building that's partly empty. It covers how buyers look at the leases, what the tenants will be asked to sign, and what happens to rent and deposits at closing.

We buy leased and partly leased industrial buildings across Philadelphia and South Jersey. We're part of a family-owned business that has been operating for over 15 years. Your leases control most of what follows, so keep copies handy as you read.

How do buyers value a warehouse with tenants in it?

Buyers value a leased warehouse mainly on its income. They weigh the rent against market rent, the years left on each lease, each tenant's strength and which expenses the tenants pay. A long lease at a fair rent to a solid tenant supports the price. A lease that ends soon, or rent well below market, makes a buyer price in re-leasing risk.

Cushman & Wakefield put the region's average net asking rent for warehouse and distribution space at $12.97 per square foot a year in the third quarter of 2026. Your building's own rent matters more than any average, but a buyer will notice a big gap between the two.

Who pays the building's expenses

Leases split the property taxes, insurance and upkeep differently. Some have the tenant pay some or all of them on top of rent, and others leave them with the landlord. Two buildings with the same rent can earn different amounts once those costs are paid. That's why a buyer reads the expense clauses as closely as the rent. Our what we buy page sets out who pays what under net and gross leases.

The things that can lower the value

• A tenant's right to end the lease early
• Renewal options at rents fixed below today's market
• A tenant that's behind on rent or in a dispute with you
• Repairs the lease makes the landlord responsible for, such as the roof or the parking lot

What will a buyer ask for on a leased warehouse?

For a leased warehouse, a buyer asks for every lease with its amendments and a rent roll listing each tenant's rent, term and deposit. If tenants reimburse taxes or upkeep, it also asks for the expense reconciliations. Before closing, it asks each tenant to sign an estoppel letter confirming the lease terms. Gathering these early keeps due diligence from stalling.

An estoppel letter, also called a statement of lease, is a tenant's signed statement of the status and terms of its lease, given before a building sells. It confirms points such as whether the lease is in full force, the date rent has been paid through and whether any notice of default has been issued. The request comes from the landlord, a lender or a prospective buyer before the sale.

If a lender is involved, a tenant may also be asked to sign a subordination, non-disturbance and attornment agreement (SNDA). In it, the tenant agrees that its lease ranks behind the lender's mortgage and that it will accept the lender as the new landlord if the lender takes over. In return, the lease is protected as long as the tenant isn't in default.

Can a tenant buy the building before you sell it?

A tenant can buy first when its lease, or a separate agreement, gives it that right. An option to purchase can generally be used on its agreed terms without waiting for you to sell. A right of first refusal is typically triggered by your decision to sell or by an outside offer. Check each lease for both before you sign a sale agreement.

Each clause can set its own steps, such as who gets notice, how long the tenant has to respond and on what terms. Read them early and follow them exactly. If a tenant has one of these rights, tell us at the start, and the timeline can allow for it.

A tenant that wants to buy can be a good outcome for you. Our written offer gives you a number to compare with the tenant's. If the lease requires you to offer the tenant the same terms first, the purchase agreement can reflect that process.

When do your tenants find out about the sale?

Unless a lease requires earlier notice, tenants may not hear about a sale until they're asked to sign estoppel letters, or until they're told where to send rent. Building visits before then can be scheduled under the lease's access terms. Direct Warehouse Buyers coordinates with you before contacting any tenant, so you can plan how they hear, within what your leases require.

Your leases may say how and when the landlord can enter. If a lease allows ordinary visits, a walk-through for an offer can be scheduled as one. If a tenant's space needs a closer look later, such as an environmental site visit, plan it with the tenant's operations in mind. If you'd like a nondisclosure agreement before you share leases or rent figures, we'll sign one.

What happens to rent and security deposits at closing?

At closing, rent for the month is split between seller and buyer by the day. Each tenant's security deposit moves to the new owner, paid over or credited at closing. The leases stay in force with the buyer as landlord, and the tenants are told where to send rent from then on. The purchase agreement sets the details.

Here's how a proration works on a sample lease. A tenant pays $20,000 rent for a month with 30 days, and the seller owns the building for the first 20 of them. The seller keeps 20 days of that rent, $13,333.33, and the buyer gets credit for the other 10 days, $6,666.67. Whether the closing day itself counts as the seller's or the buyer's is one of the details the agreement settles. Our cost guide lists the other items paid or prorated at closing.

Expense reimbursements need their own settling up. Some tenants pay estimated taxes or upkeep during the year and settle up afterward. The agreement then says who reconciles the year the building sells and who keeps or pays any difference.

What if a tenant is behind on rent or about to leave?

A tenant that's behind on rent or about to leave doesn't stop a sale, but it can change the price and the paperwork. Tell the buyer early. The purchase agreement says how unpaid rent is handled at closing, including whether the seller keeps the right to collect it. A lease ending soon can lead a buyer to price the building partly as vacant space.

If the tenant is giving notice, check the lease for its move-out duties, such as removing equipment, restoring the space or leaving it broom-clean. The purchase agreement can say who enforces them if the tenant moves out around the closing. Our page on a vacant building or a tenant leaving covers what an empty building costs to carry.

Multi-tenant and flex buildings

A flex or small-bay building with several tenants sells the same way, multiplied. Each lease gets read, each tenant gets an estoppel letter, and the rent roll shows which spaces are empty and when the others expire. Staggered expirations spread the risk of vacancy, while several leases ending in the same year concentrate it. Our page on flex and small-bay buildings covers what buyers check in them.

Town rules can come into play when tenants change, too. Philadelphia doesn't require a new certificate of occupancy when ownership or tenancy changes, as long as the approved use stays the same. Some suburban and New Jersey towns do require a certificate when a commercial space gets a new owner or tenant. Our county pages list the ones we checked: Bucks County, Montgomery County, Delaware County, Camden County, Burlington County and Gloucester County.

Small buildings had the lowest vacancy of any size group in CBRE's figures. CBRE counted 5.0% vacancy in buildings under 50,000 square feet across its Philadelphia market in the third quarter of 2026, against 18.8% for buildings of 500,000 to 749,999 square feet.

Tenants and ISRA in New Jersey

New Jersey's Industrial Site Recovery Act puts its duties on the owner or operator, so a landlord can be drawn in when a tenant runs a business the law covers. Selling the building is a change in ownership even if the tenant stays and keeps operating. The five-day notice runs from the signing of the sale agreement. A tenant that buys the building by exercising an option to purchase also counts as a change in ownership. Our ISRA guide explains how ISRA applies to landlords and tenants, and your lease may say who handles it.

What to have ready

• Every lease, amendment and side letter
• A current rent roll with each tenant's deposit
• The last year or two of expense reconciliations, if tenants reimburse expenses
• Tenant insurance certificates
• Any notices of default, disputes or move-out notices
• Service contracts the buyer would take over, such as snow removal or sprinkler testing

Selling a leased building to us

Send the address and the rent roll, or just the basics if you'd rather start there. We read the leases before we make an offer, so their terms are priced in, and our written as-is offer says which costs each side pays. 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. On a leased building, the estoppel letters and any tenant purchase rights are among those steps. How It Works covers the rest of the process. Related situations: a sale-leaseback and a loan coming due.