What is Weighted Average Lease Term, and Why Does it Matter?

Learn about this key metric for evaluating potential commercial real estate investments.

What is Weighted Average Lease Term, and Why Does it Matter?

Learn about this key metric for evaluating potential commercial real estate investments.

When you’re considering investing in a multi-tenant commercial property, one of the most important tools to pay attention to is the rent roll, which provides you with an overview of every tenant currently occupying the property and of their leases.

From a rent roll, you can then calculate the Weighted Average Lease Term (WALT). This metric plays a key role in underwriting and valuation, so in this article, we’ll provide an overview of what WALT measures and how it can guide your investing decisions.

What is Weighted Average Lease Term?

Weighted Average Lease Term essentially measures the average amount of time left for all a property’s current leases. Rather than a simple average, the WALT is “weighted,” because it takes into account the size of each tenant.

Why is Weighted Average Lease Term Important?

Weighted Average Lease Term can help you determine how much work you’ll need to do to lease the property, and when. A smaller WALT means that you’ll need to do more work to find new tenants, sooner.

Since leasing work can be quite time consuming — and expensive if you have trouble finding tenants and part of the property is left vacant for a period of time — this information should factor into the pros and cons of investing in a particular property.

What is a Good Weighted Average Lease Term?

At Excelsior Capital, the Weighted Average Lease Term is one of the key metrics we consider when evaluating a potential investment. We look for a WALT of at least three years, though this number will vary depending on the asset class.

Typically, flex industrial properties have a lower WALT, because many flex tenants rent a smaller amount of space, and term lengths are usually around 3 years.

When you compare this to a large, multi-tenant office building, it’s easy to understand why the office building would typically have a longer WALT. Large office tenants tend to sign longer leases, and many large office buildings have at least one tenant using a large amount of space.

Our team at Excelsior takes this distinction into account when looking for new investments. In particular, we look for a WALT of three years or more for flex assets, and a WALT of five years or more for office building assets.

Partner with an Expert Who Understands Commercial Real Estate

Weighted Average Lease Term is a relatively simple concept to grasp, but it’s just one tool of many that the experienced real estate investor will use to evaluate commercial properties.

This is why it’s so important to have a strong grasp of the commercial real estate space before you start investing, or to work with a partner who does.

At Excelsior Capital, we focus on investing in stable asset classes — like flex or light industrial buildings and medical office buildings — in healthy secondary markets. We’ve seen this strategy work time and time again, delivering strong returns for our investors.

If you’re interested in learning more about making a direct co-investment with Excelsior Capital, please fill out this brief form to get in touch with a member of our team.

Previous Articles


The Ultimate Guide to Commercial Real Estate Investing

Learn everything you need to know to assess the benefits of a commercial real estate investment and make the best decisions to get started.


How Much Money Do I Need to Start Investing in Commercial Real Estate?

We frequently have conversations where people tell us, “I want to start investing in commercial real estate, but I’m not sure if I have the capital.”


Benefits of Owning Commercial Property over Residential

While both types of real estate investments have their benefits, investing in CRE can be more advantageous for several reasons.

The Revolution That Wasn’t

How has technology impacted modern finance and created an asymmetrical relationship between Wall Street and individual investors? In this episode, we speak with Spencer Jakab, the author of The Revolution That Wasn’t and editor of the Wall Street Journal’s Heard on the Street column.

Tax Savings Secrets: How Cost Segregation Analysis Can Save You Money

How can cost segregation analysis help real estate investors maximize their returns? In this episode, John Hanning explores the potential benefits of cost recovery studies and depreciation.

What is a Family Owner’s Manual and Do I Need One?

It’s time to make sure you and your family are set up to continue success for generations to come. Today, Josh Kanter shares his journey transitioning from practice as a transactional attorney to reorganizing his family’s activities under a single-family office.

Key Characteristics of High-Performing Family Offices

Are family offices becoming more popular? In this episode, Robert Daugherty dives into the importance of having a functional family office, and the role of the Chief Learning Officer in it.

Talking to Your Parents about Their Finances

As your parents age, you may find that you want or need to broach the often-difficult subject of finances. In this episode, Cameron Huddleston, an award-winning personal finance journalist, discusses how to have meaningful conversations with your parents about their finances.

Pros, Cons, and Features of Robo-Advisors for the Wealthy

Learn how to amass wealth – the right way, for you. In this episode, Barbara Friedberg, a former portfolio manager and university investments and finance instructor, delves into how robo-advisors have revolutionized traditional financial advisory services.

Excelsior Capital

A real estate private equity firm that owns and operates high quality multi-tenant office assets in emerging secondary markets.

Interested in learning more about Excelsior's investment opportunities?

Excelsior Capital

104 Woodmont Blvd, Suite 120
Nashville, TN 37205




Disclaimer: Under no circumstances should any information presented on this website be construed as an offer to sell, or solicitation of an offer to purchase any securities or other investments. This website does not contain the information that an investor should consider or evaluate to make a potential investment. Other materials related to investments in entities managed by Excelsior Capital are not available to the general public.