Commercial yield depends almost entirely on the quality of the tenants in the building. A 'great location' with a brittle tenant mix will under-perform a quiet location with strong anchors every single time.
This is what we look for before signing, and what we walk away from.
Look for anchors
A healthy building has 1–2 anchor tenants on long leases (5+ years) that pull foot traffic for everyone else. Look for grocery, pharmacy, bank, or a large QSR brand. They under-pay on rent but they earn the rest of the building its yield.
Diversify the mix
Avoid buildings where more than 40% of the rent comes from a single sector. A floor full of coaching classes will empty out in one bad cycle.
The sweet spot: 25% anchor, 35% F&B and lifestyle, 25% services (clinic, salon, bank), 15% offices.
Healthy commercial benchmarks
What we want to see before recommending a retail or office unit.
- 3.5+ yrs
- WALE
- 5% p.a.
- Rent escalation
- ≤ 40%
- Single-sector concentration
- 4×
- Tenant rev / rent coverage
From the airCheck the WALE
WALE (Weighted Average Lease Expiry) tells you how long the current rent roll is locked in. Anything above 3.5 years is comfortable; below 2 means you are inheriting a renegotiation cycle.
Rent escalation and coverage
Look for 5% annual or 15% triennial escalations, and tenants whose revenue at the location covers 4x the rent. Anything lower and your tenant is one bad quarter from negotiating down.
PaperworkTry the numbers yourself
Value today
₹97.5 L
Projected value after 5 years
₹1.88 Cr
Potential gain of ₹90.2 L on paper.
Indicative only. Actual rates depend on the parcel, road access and paperwork status.
Read the lease before you admire the building
Rent is a number; the lease is the asset. Look at the weighted average lease expiry, the escalation clause, the lock-in, and who pays for what when something breaks.
A lower rent on a long, well-escalated lease with a solid covenant beats a higher rent on a short one almost every time.
What a healthy tenant mix looks like
No single sector above roughly forty percent of income, an anchor that draws footfall without dominating the rent roll, and expiry dates staggered across years rather than clustered in one.
Ask for the actual rent roll rather than the marketing summary, and check whether the anchor's rent is subsidised by everyone else.
Air qualityHow this compares with holding land
Commercial property pays you monthly and demands management. Land pays you nothing and demands almost nothing. Most portfolios we see work best holding both, the commercial unit funds the running costs, the land carries the long-term appreciation.
If you are choosing one, choose by involvement: yield with work, or appreciation with patience.
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