Revitalizing a Light Industrial Property: From Single Tenant to Stable Multi-Tenant Success

Background

Our client acquired a light industrial multi-unit property initially occupied by a single tenant under a triple-net (NNN) lease. The client opted not to employ professional property management, as the lease required tenants to cover all operating expenses directly. During the first five years of ownership, the property generated dependable cash flow with little oversight.



However, the tenant later sold their business to a national corporation, which decided the property no longer aligned with its business model. The tenant subsequently planned to vacate the premises. At this critical juncture, we were engaged to assist.

The Challenge

At the time of our involvement, the client was working with attorneys to foreclose on the property with the goal of repossession and eventual sale. Compounding the challenges were tenants who had been paying rent to the defaulted buyer under unenforceable leases. Many of these tenants were uncertain about their future but wanted to remain in the building to continue their businesses.

Our Work

Our first steps were a comprehensive review of the lease to assess tenant obligations and a detailed property inspection. This revealed several deferred maintenance issues, including roof damage, storm drain deficiencies, neglected landscaping, and a fire monitoring system in poor shape—all of which were the tenant’s responsibility under the lease. We promptly informed our client, ensured the tenant was held accountable, and oversaw the resolution of these issues, preventing the property from being left in disrepair.

Additionally, the tenant had performed several unpermitted modifications and an extensive build-out that compromised the building’s utility. Working closely with the landlord, we managed the demolition of these alterations and implemented capital improvements to position the property for new tenants.

We took charge of leasing and secured three financially stable tenants to occupy the building. A NNN budget was established, allowing operational expenses to be passed through to tenants, thereby mitigating the financial risk of a 100% vacant property. Our consistent inspections and open communication fostered strong tenant relationships and ensured steady cash flow for our client.

The Results

To enhance property efficiency and value, we procured competitive contracts for landscaping, winter services, HVAC preventative maintenance, and roof repairs. This approach balanced reasonable pass-through expenses with tenant satisfaction and maintained the property’s condition.


Today, the property is fully leased to stable tenants, delivering reliable cash flow and long-term value to our client.