Sell Vacant or Sell Leased? What Your Industrial Building Is Worth to Each Buyer

When a tenant gives notice, most owners treat it as a problem. Sometimes it is. But if you were already thinking about selling, an empty building can be worth more than a full one — because vacancy changes who is allowed to buy it.

A leased industrial building is priced by an investor off income. A vacant one is priced by a business that wants to occupy it. Those are two different formulas, two different buyer pools, and often two different numbers for the same four walls.

Two buyers, two math problems

An investor buys a rent stream. Your building is worth net operating income divided by a cap rate, and nothing else on the page moves that as much as the rent your tenant actually pays. If you want the full mechanics, they’re in what your industrial building is worth in 2026.

An owner-user buys a place to run a business. They are comparing your building to the rent they’d otherwise pay a landlord, and to the fixed payment they’d have if they owned. Cap rate never enters the conversation. They price on dollars per square foot, clear height, power, loading, and yard — and, critically, they can only buy a building they’re able to move into.

The arithmetic on a 10,000 SF Concord building

Say you own a 10,000 SF freestanding building in Concord with one tenant on a lease signed in 2021 at $0.95/SF NNN.

• Sold leased: $114,000 of annual rent, call it roughly $108,000 of NOI after reserves and structural vacancy. At a 6.5% cap rate, that’s about $1.66 million, or $166/SF. A buyer will note the rent is under market and pay a little for the upside — but they’re underwriting four more years of $0.95 rent, not tomorrow’s.
• Sold vacant: the same building, delivered empty, competes in the owner-user market. Well-located Contra Costa owner-user product in this size range has been trading meaningfully above what a below-market rent roll supports — frequently in the $250–$300/SF range for functional buildings, which puts the same asset at $2.5 to $3.0 million.

Those are illustrative numbers, not a quote on your property. But the shape of the gap is real, and it comes from one thing: the owner-user isn’t buying your lease. They’re buying the alternative to writing a rent check for the next twenty years, and SBA 504 financing lets them do it with roughly 10% down.

The below-market lease is what usually decides it

The gap only opens when your in-place rent lags the market. If your tenant is at or above market on a long, well-structured lease with good credit, the investor number is strong and there’s no reason to chase vacancy — that income is the value. This is the same fork covered in sell or reposition, viewed from the other side: instead of raising the rent, you remove it.

So the test is simple. Pull your rent roll next to today’s asking rates in your submarket. If you’re 15% or more under, and the lease expires inside your selling window, the vacant path deserves a real look.

What vacancy actually costs you

An empty building is not free to hold, and the honest accounting includes:

• Lost rent while you market. A well-priced owner-user building in the East Bay typically takes several months from listing to close.
• Operating expenses you now absorb. Taxes, insurance, and maintenance stop passing through the moment the tenant leaves.
• A smaller, slower buyer pool. Owner-users buy once a decade and move on their own timeline. Investors are always shopping.
• Financing risk. SBA deals have more moving parts, and an owner-user’s lender wants a business that qualifies, not just a building that appraises.

Six months of carrying cost on the building above runs roughly $60,000 all-in. Against a several-hundred-thousand-dollar spread, that’s a trade most owners would take. Against a $100,000 spread, it isn’t.

Start the decision 12 to 18 months out

This is a timing decision more than a pricing one. The lever is your next lease expiration, and it only works if you reach it before you’ve renewed. Twelve to eighteen months ahead, run three numbers: what the building is worth leased as-is, what it’s worth delivered vacant, and what a short-term or month-to-month renewal does to both. Then decide whether to renew, hold the tenant on a short leash, or let the space come open on purpose.

The owners who capture the spread aren’t taking more risk. They just ran the comparison while they still had a choice.