What is a multi-tenant building? Definition & Comparison with Single-Tenant

Commercial real estate is in high demand, because every company needs a company headquarters, often also additional operating or office space. Multi-tenant buildings offer a flexible and efficient solution here. But what exactly does “multi-tenant” actually mean? What advantages do such properties offer compared to single-tenant models, and what should companies pay attention to when choosing? This article gives a comprehensible overview.

What is a multi-tenant building?

A multi-tenant building is a commercial property that is used by several independent tenants at the same time. Each tenant occupies their own office space, floor, or unit within the building, while certain areas – such as entrances, kitchens, or conference rooms – are shared.

Multi-tenant buildings are particularly common in the commercial sector . Typical examples are office buildings, shopping centres or business parks. This form of real estate offers a high degree of flexibility: tenants can typically decide whether they want to design their rooms themselves or move into furnished units. The contract terms are usually between 5 and 10 years, which is common in the business environment. Monthly flat rates also give companies good cost control.

A major advantage of multi-tenant real estate is that when a tenant moves out, a new one can be found quickly, because demand is high. As a result, vacancies often remain short, which is also attractive for owners.

The opposite of a multi-tenant building is the so-called single-tenant model. In this case, a single company uses the entire property exclusively, without other tenants in the building. Although this allows full freedom of use, the costs are typically higher and the contractual obligations are much longer.

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What does single-tenant mean?

A single-tenant building is a property that  is fully occupied by only a single tenant. This means that all areas, rooms, and facilities – from the entrance area to the offices to meeting rooms – are available exclusively to this one company.

Single-tenant properties offer maximum design freedom, as the tenant can adapt the building individually to his requirements. This model is particularly suitable for large companies with a large footprint or special requirements for security and infrastructure.

In contrast to the multi-tenant model, the leases for single-tenant properties are usually more long-term and the rental costs are correspondingly higher. In return, companies benefit from exclusive use and complete control over the entire building.

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Advantages of single-tenant and multi-tenant buildings

Both Single Tenant and Multi Tenant buildings offer a number of advantages.

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Single tenant or multi-tenant buildings – which is better suited for companies?

Since both options offer different advantages, it is not possible to make a blanket statement whether you should rent space or premises in a single-tenant or multi-tenant building. It therefore depends entirely on your individual preferences and ideas.  

Single Tenant buildings provide an environment tailored to your business. Your needs are covered here. You have full control over the layout and design, so that potential customers can tell which company it is from a distance. You also benefit from a high level of privacy, as you don't have to share resources with other tenants.

However, office space in a single-tenant building often turns out to be a major investment. The costs for rent, maintenance, and administration are usually significantly higher than the costs for office space in a multi-tenant building.

This means that multi-tenant buildings are considered a flexible and cost-effective investment. Nevertheless, you don't have to do without a professional public image. On the contrary, you are surrounded by other companies in a multi-tenant building, so there are optimal opportunities to expand your network or collaborate.  

This increases convenience because certain areas were shared and therefore do not have to be maintained by one company. There is a bit of a lack of individuality here, as the design has to be adapted to the needs and preferences of all tenants. However, in your rented unit, you have free rein and can design your premises in such a way that they optimally suit your company.  

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Multi-tenant building or business center – what's the difference?

Business centers and multi-tenant office buildings are often lumped together. However, they are not one and the same. A business center also houses several companies. The owner therefore rents to many tenants.

The difference to a multi-tenant building, however, is that the landlord of a business center offers an all-round service. This allows companies to concentrate fully on their core business and do not have to perform any tasks related to maintenance, care, and repair of the building. Accordingly, the running costs are somewhat higher than for a multi-tenant building.  

In today's world, however, the boundaries are becoming more and more blurred. Regularly, rental units are already offered in multi-tenant buildings with certain services.

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Are multi tenant buildings secure?

Depending on what your company specializes in, you handle more or less valuable goods and data. In any case, you are dealing with personal data – for example, from your customers or your business partners. Since you are liable to prosecution if you do not adequately protect this data, it is essential to think about the security of your office premises. What about security in rental units of a multi-tenant building?

As a general rule, only you alone have access to the space you have rented. Only separate areas are used jointly – for example, the stairwell, the elevator or, in some cases, a company kitchen. This means that no unauthorized person can gain access to your premises and, for example, steal data.

Building owners usually rely on a locking system for a high level of security. This works in such a way that a key can open the main entrance as well as an office unit. Users therefore have no access to the other units.

It becomes problematic when an employee loses a key or it is stolen. Since the loss of keys poses a high security risk for all office units, the locking system and keys must be replaced once. The building owner incurs high costs.

Electronic locking systems are therefore proving to be much more practical. Such systems no longer use physical keys. Rather, other access media such as transponders, key cards, fingerprints, or apps are used. This means that if the key is lost, the corresponding key can simply be blocked. In addition, access authorizations can be easily controlled. Since this is a very practical function, many owners of buildings in which many people go in and out rely on electronic locking systems. At BlueID, you get tailor-made solutions that are ideally suited for your multi-tenant building.

Other advantages of a digital locking system are the increased convenience of accessing the building and flexibility. Not every employee of your company in the multi-tenant building has to have the same access authorizations – everything can be configured individually.

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Result

Multi-tenant buildings are very popular among businesses. Companies can rent individual units and are located in one building with many other companies. Great opportunities for networking arise, and often even a certain service is offered by the building owner. For a high level of building security, electronic locking systems are worthwhile. This makes access to a multi-tenant building secure, flexible and convenient.