It’s High Time for Sale-Leasebacks

In today’s commercial real estate environment, business owners who own and occupy their facilities are reassessing how to best position their assets. One successful strategy continues to be sale-leaseback transactions. By unlocking equity tied up in real estate while maintaining operational control, a sale-leaseback can provide both liquidity and flexibility. As we move into 2026, market conditions have shifted meaningfully, warranting a fresh look at whether a sale-leaseback makes sense for your client.

Rate relief has arrived

The Federal Reserve continued its easing cycle through 2025, and Cushman & Wakefield forecasts rates moving toward a neutral 3 percent by late 2026. Ten-year Treasury yields settled around 4 percent last year, down from the mid-to-high fours earlier in 2025, improving the cost of capital for investors. According to W. P. Carey, this stability proved a meaningful tailwind for sale-leaseback activity in the second half of 2025, enabling investors to offer more competitive cap rates to potential tenants. However, lease terms, length of commitment, and company credit strength still matter more than Fed policy in determining sale-leaseback valuations.

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Trying to time the market doesn’t work

Trying to “catch the bottom” or “wait for the peak” often results in missed opportunity. CBRE forecasts commercial real estate investment activity to increase 16 percent in 2026 to approximately $562 billion, nearly matching pre-pandemic averages. Colliers projects a 15 percent to 20 percent increase in sales volume as institutional and cross-border capital reenters the market. Today’s environment offers balance: Sellers gain liquidity and favorable lease terms while buyers see long-term value in stable, income-producing assets backed by good credit.

What makes 2026 attractive

Several factors favor acting now. Capital is flowing again. According to Cushman & Wakefield Chief Economist Kevin Thorpe, “confidence in the CRE sector is building.” The spread between government and corporate bond yields has narrowed to roughly one percentage point, well below historical averages, signaling increased investor risk appetite. Banks are gradually increasing commercial real estate exposure after years of pullback. Cap rates for most property types are expected to compress 5 to 15 basis points according to CBRE, supporting stronger valuations. Private equity activity is also rebounding, with W. P. Carey noting that increased M&A transactions should further boost sale-leaseback volume throughout 2026.

Potential headwinds to consider

Some factors warrant consideration. Significant commercial real estate loan maturities totaling $1.8 trillion continue working through the system, potentially creating more investment options for buyers. CoStar reports the national industrial vacancy rate reached 7.5 percent in late 2025 and is expected to peak at 7.9 percent by the third quarter of 2026. Additionally, industrial rent growth hovers near 13-year lows at approximately 1 percent, keeping investor underwriting conservative. These dynamics could pressure valuations for properties with weaker tenant credit or shorter lease terms.

Why industrial remains favored

Despite rising vacancy in some markets, industrial remains the favored asset class. Quality, well-located single-tenant buildings with strong tenant credit remain scarce. That scarcity keeps investor demand resilient.

Strategic benefits

For many business owners, a sale-leaseback remains the fastest route to a meaningful infusion of debt-free capital, ready to redeploy into expansion, paying down higher-cost liabilities, or bolstering working capital. Turning an illiquid asset into liquid capital strengthens your financial profile when lenders and investors are scrutinizing leverage and liquidity closely. An sale-leaseback structure ensures continued operational control while providing flexibility that ownership does not. Businesses tied to specific sites can secure long-term occupancy with renewal options tailored to their growth plans.

For business owners considering the sale of their operating company, a sale-leaseback now can streamline that path. Most private equity buyers prefer asset-light companies and shy away from owning real estate. Carving the property out in advance eliminates a key friction point, often leading to a cleaner, faster and potentially more lucrative business sale.

The bottom line

Investors continue to favor industrial and single-tenant net lease assets. With capital markets stabilizing, institutional buyers returning, and cap rates poised to compress, 2026 presents a favorable environment for sale-leasebacks. The question to ask is: Is the cost of capital in a sale-leaseback transaction cheaper and cleaner than the business’ best traditional debt alternative today?

Rate cuts provide a mild tailwind. The real factors affecting valuation remain the rent you can defend, the company’s credit strength and the structure of the NNN lease. If there is an opportunity for a high-return opportunity for cash and fewer bank strings or are positioning for an operating-company sale or relocation, a 2026 sale-leaseback deserves serious consideration.

Daniel Levison is CEO of CRE Holding USA.