New investors always go straight to the rate per square foot. That’s the headline number, so it feels like the one that matters. It isn’t.
The number I look at first is the term, how long the tenant is committed, and right behind it, who’s responsible for the costs.
A five-year lease at a slightly lower rate with a strong tenant on a triple-net structure beats a one-year lease at a premium rate every single time. One gives you a predictable income stream you can borrow against and build around. The other gives you a great-looking month and a vacancy looming on the horizon.
Rent tells you what you earn today. Term and structure tell you what you can count on tomorrow. And in this business, what you can count on is worth far more than what looks good right now.
Don’t buy the rent. Buy the certainty!