The Lease Structure Is What’s Making or Breaking Deals Right Now

In a normal market, you negotiate rent, you sort out TI, you sign the lease. But right now? The structure of the lease itself is what’s killing or saving the deal.

We’re seeing more groups walk from otherwise good locations because the lease terms don’t work. Base rent looks fine on paper, but the escalations kill the long-term value. Or the landlord wants the tenant to front six figures in improvements without any rent abatement. Or the renewal terms are vague and make the entire investment shaky.

In behavioral health and senior living especially, lenders are looking at lease terms hard. If your rent coverage is too thin, your financing is dead on arrival. If you’re trying to sublease or JV and the lease isn’t structured cleanly, forget about bringing in capital.

The market isn’t offering a lot of room for mistakes right now. You’ve got to get this stuff right on the front end—clear rent schedules, reasonable escalations, options to extend, and protection against CPI volatility. None of it’s glamorous, but it’s what holds the deal together.

You don’t win deals by offering the highest rent anymore. You win them by offering the cleanest structure.

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