Published: May 2026
WAULT is the metric that appears in almost every logistics real estate investment memo. Weighted average unexpired lease term. It tells you how many years of contracted income remain before the tenant has the right to leave.
What it does not tell you is whether they will.
WAULT is a countdown. It counts time. It says nothing about the probability that the tenant renews when the clock runs out — because probability of renewal is not a function of time. It is a function of how much the building costs the tenant to leave.
The question WAULT cannot answer
A tenant with 3 years left on their lease may renew with near-certainty, because relocating their operation would cost them 18 months of disruption, €4 million in fit-out, and an increase in annual transport costs that dwarfs any rental saving they might achieve elsewhere. Or they may have been quietly planning to consolidate into a new facility for the past year and are simply running out the term.
WAULT treats both situations identically. A 3-year WAULT is a 3-year WAULT.
Investors price this risk using market vacancy rates, lease length norms, and the general creditworthiness of the tenant. These are reasonable proxies in markets where buildings are interchangeable. In logistics real estate, buildings are not interchangeable. The relevant question is not "how difficult is it to re-let a logistics building?" It is "how difficult is it for this specific tenant to leave this specific building?"
That question has a concrete, modelable answer. And it varies enormously.
Operational dependency: the metric that actually matters
Operational dependency measures how deeply embedded a building is in a tenant's supply chain. A highly dependent tenant cannot leave without restructuring their logistics network, absorbing significant transition costs, or accepting a sustained reduction in service levels. A low-dependency tenant can relocate within a leasing cycle with limited operational consequence.
High operational dependency is the real driver of lease renewal in logistics real estate. It is also the real driver of a tenant's willingness to accept above-market rent reviews — because the cost of leaving exceeds the cost of staying, even at a premium.
Dependency is built from several compounding factors:
- Customer delivery commitments tied to the location. If the building sits within a drive-time window that is integral to the tenant's last-mile service model, relocating breaks those commitments. For a parcel carrier with contracts specifying next-day delivery to postcodes only reachable from this node, the building is the service.
- Fit-out and automation investment. Tenants who have installed conveyor systems, automated picking equipment, mezzanines, or cold chain infrastructure have made the building part of their asset base. The write-off cost of that investment is a direct offset against any rental saving from relocation. Cold chain fit-outs in particular — often costing 2-3x the ambient build cost per sqm — create extraordinary switching costs.
- Staff and catchment lock-in. A distribution centre that has recruited and trained 400 logistics workers from a specific catchment area cannot simply pick up and move 30 kilometres without losing most of them. In tight labour markets, that workforce is irreplaceable on a short timeline.
- Integration with supplier or customer networks. Cross-dock operators and consolidation hubs are often positioned at the intersection of multiple carrier and supplier flows. Their location is not just operationally convenient — it is structurally embedded in other companies' networks.
What high and low dependency look like in practice
Automated fulfilment centre
Tenant has installed a goods-to-person picking system and conveyor infrastructure. Relocation cost exceeds €6m. Building is the only site within the required drive-time of their key B2C postcodes.
Cold chain hub
Custom refrigeration fit-out. Temperature-controlled loading bays. Staff trained in pharma handling procedures. No equivalent building available within the required radius. Switching cost is 3-5 years of rent.
Ambient 3PL storage
Standard racking. No bespoke fit-out. Multiple comparable buildings available in the submarket. Tenant manages several sites and has flexibility on which contracts run from which location.
Overflow capacity
Building taken to handle seasonal peak. Tenant's primary operations run from a different site. This lease was always tactical, not structural. Renewal is unlikely unless the peak volume becomes permanent.
Why this matters at acquisition
A building with 4 years of WAULT and a highly dependent tenant is a better income investment than a building with 7 years of WAULT and a low-dependency tenant who is quietly evaluating alternatives. The first will almost certainly renew — possibly at a premium. The second represents a material vacancy risk that WAULT alone does not disclose.
This has practical implications for how acquisitions should be underwritten:
- Re-letting assumptions should be dependency-adjusted. High-dependency use cases warrant longer assumed tenancy periods and lower void assumptions. Low-dependency use cases should be stress-tested against a vacancy scenario at lease expiry.
- Rent review risk runs both ways. A highly dependent tenant has limited negotiating leverage at review. A low-dependency tenant — particularly one with realistic alternatives — has the leverage to resist above-inflation increases or to use the review as an exit trigger.
- The optimal use case determines future income, not the current tenant. If a building is occupied by a low-dependency tenant but is structurally suited to a high-dependency use case, the residual value after re-letting may be higher than the current income suggests.
"On the occupier side, we knew years before lease expiry whether we planned to renew. The signals were all there: whether the building was central to our network or peripheral, whether we'd invested in the fit-out, whether the labour market supported our headcount plan. Landlords who understood these signals negotiated from strength. Most did not."
Carl-Friedrich zu Knyphausen, Managing Director, Logivalue
How to assess dependency before you acquire
Operational dependency is not a number that appears in a data room. It requires understanding the tenant's supply chain — how central this building is to their network, what they have invested in it, and what the realistic alternatives look like.
This is exactly the type of analysis that use case identification and supply chain cost simulation produce. By modelling the building's characteristics against the cost structure of the current tenant type, it is possible to quantify the switching cost — and therefore the probability of renewal — with far more precision than WAULT alone allows.
For assets where the current occupier is a low-dependency tenant, the same analysis identifies which use case would create high dependency in a successor tenant — and what building modifications, if any, would attract it. That changes the repositioning story completely.
WAULT tells you when the decision point arrives. Operational dependency analysis tells you what the tenant will decide.
Understand your renewal risk before it becomes a vacancy
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