Sale-Leaseback Math for Metro Vancouver Industrial Owner-Users
A sale-leaseback turns a building into capital without moving the business. Whether it creates value comes down to one spread: the cap rate you sell at versus the return you earn on the proceeds.
June 23, 2026 · 2 min read · By Samuel Brahem, in association with NAI Commercial
The mechanics
You sell the building to an investor and sign a long lease to stay. The investor gets a stabilized asset with a credit tenant; you get liquidity. Three variables drive it: the sale price expressed as a cap rate, the lease rate you commit to, and the opportunity cost of the capital released.
Well-located Metro Vancouver industrial trades at roughly 4.25% to 5.50%. A Richmond owner selling at a 4.75% cap with a $20 per sq. ft. lease is effectively borrowing at 4.75%, which compares well with current commercial mortgage rates and covenant demands.
The market behind the math
Net asking rents have eased from a 2023 peak near $22 per sq. ft. to about $20.10 in Vancouver, $19.67 in Burnaby, $20.26 in Richmond, $18.66 in Surrey, $17.91 in Delta and $19.20 in Langley in Q2 2026. Vacancy at 4.3% and availability at 5.8% mean leasing an empty building takes longer, which makes a committed tenant more valuable to buyers, not less.
The costs that hide in the spread
- Escalations of 2.5% to 3.5% a year compound over a 10 to 15 year initial term
- Triple-net obligations become contractual: taxes, insurance and maintenance
- Foregone appreciation, especially in Vancouver and Burnaby where redevelopment optionality adds value
- Terminal risk at expiry: renew at market, relocate, or buy back at a future price
A 50,000 sq. ft. Surrey building bought five years ago at $225 per sq. ft. and worth $375 today is a different decision than one bought last year.
Terms that matter
Investors want 10 to 15 year initial terms with renewal options; longer terms support a higher price. Fixed or capped renewal rates protect you but cost you on price, so the market usually lands at fair market value with floors and ceilings. Negotiate assignment and sublet rights if your sector is consolidating.
When it fits
Expansion capital when bank lending is tight, balance sheet clean-up ahead of a sale or recap, a business whose edge is not real estate, or succession planning that needs to pay out a retiring principal. If capital needs are low or your site has redevelopment or transit upside, holding usually wins.
Expect 60 to 120 days from LOI to closing. Get the appraisal, environmental report and deferred maintenance sorted before you go to market.
