Single-Tenant Net Lease Investment in Salt Lake City
Salt Lake City's single-tenant net lease market keeps getting tighter. 1031 exchange buyers from California are pushing cap rates down, especially for investment-grade tenants. Credit tenants in high-traffic locations are trading at 4.75%-5.25%. B+ tenants are still getting 5.5%-6.5%, which looks reasonable compared to Denver or Phoenix. The challenge isn't finding buyers. It's finding inventory that makes sense at these prices.
Market Context
Cap Rate Range
4.75%-6.5% depending on tenant credit and location. Investment-grade national tenants are sub-5% in prime locations. Regional tenants with solid financials are 5.5%-6%. B-credit or short-term leases push above 6%.
Current Vacancy
Limited available inventory. Most quality NNN properties are build-to-suit or sale-leaseback deals. Vacancy in existing single-tenant buildings is under 3% for investment-grade tenants.
Rent Trend
Annual escalations averaging 1.5%-2.5%. Newer deals include CPI escalations with 2% floors. Medical and pharmacy tenants are getting 3% fixed escalations in 15-20 year deals.
Absorption
Single-tenant properties typically pre-leased or sold within 90 days of completion. Existing buildings with lease terms over 10 years sell within 60 days on average.
Price Per Unit Trend
Not applicable for single-tenant net lease - focus on price per square foot ranging from $200-500/SF depending on tenant credit and construction quality.
Transaction Volume
$180-220M annually in single-tenant NNN deals. Volume up 25% from 2024 driven by 1031 exchange activity and sale-leaseback transactions from expanding retailers.
Submarket Analysis
West Valley/Airport Corridor
5.75%-6.5% capVacancy
Under 2%
Avg Rent (1BR)
N/A
Strong for logistics and quick-service restaurants. Amazon and UPS distribution nearby drives traffic.
OM Tip
Include traffic counts on major arterials. Airport proximity affects tenant mix restrictions.
Silicon Slopes (Lehi/Draper)
4.75%-5.5% capVacancy
Under 1%
Avg Rent (1BR)
N/A
Premium pricing for bank branches and medical uses. Tech worker demographics support higher-end retail.
OM Tip
Highlight demographics within 3-mile radius. Include major tech employer locations and employee counts.
Sugar House District
5.25%-6% capVacancy
2-3%
Avg Rent (1BR)
N/A
Mixed-use development driving foot traffic. Good for fitness and healthcare tenants.
OM Tip
Show planned residential delivery within 1 mile. Include streetcar accessibility data.
Downtown Core
5.5%-6.25% capVacancy
3-4%
Avg Rent (1BR)
N/A
Office occupancy recovery affects retail performance. Banks and pharmacies still performing well.
OM Tip
Address parking availability and validate foot traffic post-COVID. Include office occupancy trends nearby.
Murray/Midvale Corridor
5.75%-6.5% capVacancy
2-4%
Avg Rent (1BR)
N/A
Solid middle-market location. Good for auto services and everyday retail.
OM Tip
Include TRAX line accessibility. Show household income growth trends in trade area.
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What Your OM Needs to Address
Complete Lease Abstract
Full lease terms including all amendments, renewals, and side letters. Dark store provisions are deal killers if not disclosed upfront.
Data to Include
Base rent, escalations, renewal options, assignment rights, co-tenancy requirements, permitted uses, maintenance responsibilities, dark store clauses
Tenant Financial Package
Three years of tenant financials plus guarantor info. Local franchisees need parent company guarantees clearly documented.
Data to Include
Tenant and guarantor financial statements, credit reports, D&B ratings, franchise disclosure documents if applicable
Site Location Analysis
Traffic counts, demographics, and competition within trade area. Utah's growth story needs current data, not five-year-old studies.
Data to Include
Daily traffic counts, intersection analysis, 1-3-5 mile demographics, household income growth, competitor locations and performance
Rent Roll and Escalation Schedule
Show rent escalations over full lease term. Fixed escalations vs CPI adjustments make big differences in valuation.
Data to Include
Annual rent schedule, escalation methodology, market rent comparisons, percentage rent provisions if applicable
Property Condition Assessment
Recent inspection report and capital expenditure projections. Single-tenant buyers want to know exactly what they're buying.
Data to Include
Engineering report, roof and HVAC condition, ADA compliance status, environmental Phase I, capital improvement schedule
Market Position Documentation
Show why this location works for this tenant. Drive times to population centers and competing locations matter.
Data to Include
Trade area analysis, drive time studies, market penetration analysis, expansion or contraction plans for tenant in market
Investment Outlook
Short Term
Cap rate compression continues through 2026. 1031 exchange volume stays high as California investors rotate money. Investment-grade tenants will push below 4.5% in prime locations. Supply remains limited.
Medium Term
Interest rates stabilizing should slow cap rate compression by 2027-2028. New construction will increase supply, especially in Silicon Slopes and airport corridor. Tenant credit quality becomes more important as market normalizes.
Long Term
Utah's population growth supports long-term demand through 2030+. Water restrictions may limit some development but shouldn't affect existing properties. Tech sector diversification reduces concentration risk from any single employer.
Buyer Profile
1031 exchange buyers dominate. High-net-worth individuals and family offices seeking stable cash flow. Some REITs active for larger portfolio deals. Debt typically 65-75% LTV at 5.5%-6.5% rates for qualified properties.
Marketing a single-tenant net lease property in Salt Lake City?
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