A.CRE

Lease Depth

The distance measured between the building window line and the building core wall’s exterior side.

Putting ‘Lease Depth’ in Context

Horizon Partners, a real estate investment firm specializing in core-plus office acquisitions, recently acquired The Meadowview Office Park, a suburban office property in Orlando, Florida. The property comprises three Class B+ office buildings, totaling 150,000 square feet of rentable space. Built in the early 2000s, Meadowview features a mix of modern amenities, including energy-efficient glass façades and flexible floor plates catering to midsize tenants.

During the due diligence phase, Horizon Partners evaluated various design characteristics to assess the marketability and potential value of the property. A key consideration was lease depth—the distance between the window line and the core wall on each floor.

Lease Depth Considerations

The lease depth at Meadowview Office Park measures 45 feet, which falls within the standard range of 40–50 feet for suburban office properties. This depth supports efficient tenant layouts, allowing for a variety of office configurations, such as:

  • Private offices along the window line, ensuring access to natural light.
  • Open floor plans for collaborative teams, with workstations arranged in the interior zone.
  • Hybrid layouts, blending open areas and enclosed meeting spaces.

The property’s lease depth was also a critical factor in analyzing tenant retention risks. Smaller tenants occupying single-floor suites favored the building’s depth, as it minimized wasted space and maintained natural light throughout the premises. Additionally, the efficient lease depth allowed the leasing team to market the property as ideal for tenants seeking 5,000 to 20,000 square feet—perfect for Orlando’s growing professional services sector.

Financial Impact of Lease Depth

To evaluate the impact of lease depth on leasing potential, Horizon Partners performed a comparative analysis. Similar properties in the Orlando market with lease depths exceeding 50 feet often struggled to lease interior spaces due to reduced daylight exposure. As a result, those properties experienced longer vacancy periods and higher tenant improvement costs to accommodate custom layouts. In contrast, Meadowview’s manageable lease depth contributed to its above-market occupancy rate of 92 percent at acquisition.

Over the first year of ownership, Horizon Partners achieved an NOI of $2.5 million, supported by stable rents averaging $24 per square foot. The balanced lease depth also minimized operational risks by making tenant improvements more predictable and cost-effective.

Conclusion

Lease depth plays a significant role in determining the functionality, tenant appeal, and financial performance of office properties. At Meadowview Office Park, the optimal lease depth of 45 feet enhanced leasing flexibility, helped secure long-term tenants, and supported Horizon Partners’ core-plus investment strategy. This case highlights how understanding lease depth can directly impact both marketability and investment returns.

Click here to get this CRE Glossary in an eBook (PDF) format.
by