Retail strip mall development - San Antonio, TX region - Looking for consultant
Member since 2023 路 3 posts 路 2 votes
Retail strip mall development - San Antonio, TX region - Looking for consultant
Most Popular Reply
Real Estate Broker 路 Canton, GA 路 Member since 2010 路 15k+ posts 路 11k+ votes
2yYes I know the companies.
Be careful who you lease up as tenants. Some leasing brokers like to (fill them fast) with weak tenants that are not properly vetted so they get paid quick. You have pre-lease to show the lender and they give the construction loan. You finish the project out in 12 to 18 months and the tax assessment is orginally low because dirt value only, then building 50% occupied, then 90 to 100% occupied (hopefully) but then gets fully reassessed.
The reassessment pushes your base rent plus CAM super high and shocks your mom and pop to local tenants. They start defaulting or wanting help from the landlord with adjustment period. Meanwhile you have to fight the high tax assessment.
When you are new developer the lenders want at least 50% pre-leased to start funding. When you are developer that has done it long time and proven yourself they often do not require this because of track record and experience with strength of net worth and liquidity compared to the project being built.
You have to determine if rents are even viable with a strip center. Often those tenant cannot pay much rent per foot versus a single tenant business model.
Example a 3,000 sq ft Chick Fil A might pay 150k to 200k ground rent for strong sites and construct building on their own dime for 1 acre site. Even if you need to build single tenant maybe 200 a foot to 250 a foot so 600 to 700k costs before TI, leasing fees, and legal fees, etc.
9,000 sq ft center likely 2 million plus to construct. All fees in maybe around 2.6 to 3 million. Let's be generous and say you get 35 a foot before cam costs.
315,000 NOI - 10% vacancy underwriting = 283,500 NOI
283,500 / 4,350,000 = 6.5 cap
3,000,000 / 4,350,000 = About 31% gross Margin
These are very loose numbers and not at all meant to be absolute there are tons of other things that go into development. Developers can charge fee for development services where they handle the building and everything but can add 100k to 200k or more with fees to the project versus doing it yourself but without experience you can make tons of mistakes whereas the experienced developer hopefully just makes a few tiny mistakes that impacts the projects very little so it's still a success.
The developers have construction crews and processes proven over time and because they do volume can often get costs lowered for the project which can sometimes negate their fees you have to pay.
It's really about what life you want to live. Personally I did not want to be a full time retail center developer. Instead I like brokering as a principal broker and owner of my company clients buying existing properties and then I buy value-add to reposition myself mainly single tenant.
Doing that I make 7 to 8 figures a year profit to myself. Depends on equity upside positions in my properties after stabilization and also how many broker deals I do that year. One is immediate income to the bank and the other is upside equity and some of the cash flow ongoing.
If there is not an association you are part of or deed restrictions it can help make it easier to develop the land because then you are getting county or city approval for zoning type and site type. Some parts of Texas do not have zoning but other hurdles to cross.
11 Replies
- Cincinnati, OH 路 Member since 2020 路 4k+ posts 路 3k+ votes2y
@Account Closed, while I can't provide direct references, I would look at the other owners of properties in the area.
While it isn't one stop shop, per se, I would talk to the retail brokers, since they tend to be easier to find. CBRE, Colliers, JLL, etc. These groups do tenant and landlord rep, and you can often see their "for lease" signs in other shopping centers. They would a) be able to give you some general feedback on if your ideas is even viable, and b) know local developers that may be able to help.
- Developer 路 San Antonio 路 Member since 2016 路 157 posts 路 85 votes2y
Hi @Account Closed, I am a civil engineering consultant based in San Antonio. I'd be happy to have a conversation with you about your site. We are not involved directly in items like leasing or construction management, but provide surveying, platting, civil plans and such in order to get building permits. Feel free to send me a message.
- Member since 2023 路 3 posts 路 2 votes2y
Quote from @Jamie Hora:
Hi @Account Closed, I am a civil engineering consultant based in San Antonio. I'd be happy to have a conversation with you about your site. We are not involved directly in items like leasing or construction management, but provide surveying, platting, civil plans and such in order to get building permits. Feel free to send me a message.
Thank you! Just sent you a message @Jamie Hora
- 2yHenry ClarkPro MemberDeveloper 路 Member since 2020 路 4k+ posts 路 4k+ votes
Reach out to Romelda Cantu in Floresville, near you. There is a lot more commercial going on over there. She helped my brother and I out on a project and was all in, on the process. Tell her Harvey and Henry Clark, say hello.
You're talking two different functions.
I would identify the Commercial realtor first, if you're in the planning stage. They will give you some input on facia, parking, layout, etc.
Get their suggestion on the General Contractor. Your build type will help determine that.
Check your Flood Way or Flood zone designation on your property. If you fill on your side, it will push water towards the neighbors.
- 2yHenry ClarkPro MemberDeveloper 路 Member since 2020 路 4k+ posts 路 4k+ votes
Ask the realtor. I would be looking at youth offerings. TKD, dance, tumbling, dentist, etc. You have higher income area, and everyone is driving towards San Antonio for those interests. You would be a magnet for the surrounding towns. Less economic downturn with Support for children, especially in a higher wealth area. Realize when you say retail strip mall, you were thinking more retail sales. I'm thinking more in terms of risk reward.
- 2yKristi KandelPro MemberDeveloper 路 Fort Myers Beach, FL 路 Member since 2018 路 383 posts 路 195 votes
Quote from @Account Closed:
Hello,
I am building a retail strip mall about 45 minutes south of San Antonio, TX.
This is my first venture in retail, i'm wondering if there are any full-service companies out there that can help pre-lease, and also handle the construction of the building.
We own the land outright, it's 2 acres right next to a HEB grocery store and I'm trying to get some idea on construction costs to build a 6000-9000 sqft building.
Trying to do as much prep and planning before committing to construction.
I've heard of Hunington Properties and Retail Builders Group, wondering if anyone has had any experiences with these companies.
Thank you!Hey Dennis,
Typically you'd want to hire a broker for the leasing and then hire your development team (arch, GC, eng, etc.) separately. If it's an existing building you can likely rely on your architect for the plans and permitting and the contractor for construction with you overseeing the entire project as the property manager.
Here is a link to how to find your team: https://drive.google.com/drive/folders/13Z0B7mV--YRtVN3TJhez...
- Real Estate Broker 路 Canton, GA 路 Member since 2010 路 15k+ posts 路 11k+ votes2y
Yes I know the companies.
Be careful who you lease up as tenants. Some leasing brokers like to (fill them fast) with weak tenants that are not properly vetted so they get paid quick. You have pre-lease to show the lender and they give the construction loan. You finish the project out in 12 to 18 months and the tax assessment is orginally low because dirt value only, then building 50% occupied, then 90 to 100% occupied (hopefully) but then gets fully reassessed.
The reassessment pushes your base rent plus CAM super high and shocks your mom and pop to local tenants. They start defaulting or wanting help from the landlord with adjustment period. Meanwhile you have to fight the high tax assessment.
When you are new developer the lenders want at least 50% pre-leased to start funding. When you are developer that has done it long time and proven yourself they often do not require this because of track record and experience with strength of net worth and liquidity compared to the project being built.
You have to determine if rents are even viable with a strip center. Often those tenant cannot pay much rent per foot versus a single tenant business model.
Example a 3,000 sq ft Chick Fil A might pay 150k to 200k ground rent for strong sites and construct building on their own dime for 1 acre site. Even if you need to build single tenant maybe 200 a foot to 250 a foot so 600 to 700k costs before TI, leasing fees, and legal fees, etc.
9,000 sq ft center likely 2 million plus to construct. All fees in maybe around 2.6 to 3 million. Let's be generous and say you get 35 a foot before cam costs.
315,000 NOI - 10% vacancy underwriting = 283,500 NOI
283,500 / 4,350,000 = 6.5 cap
3,000,000 / 4,350,000 = About 31% gross Margin
These are very loose numbers and not at all meant to be absolute there are tons of other things that go into development. Developers can charge fee for development services where they handle the building and everything but can add 100k to 200k or more with fees to the project versus doing it yourself but without experience you can make tons of mistakes whereas the experienced developer hopefully just makes a few tiny mistakes that impacts the projects very little so it's still a success.
The developers have construction crews and processes proven over time and because they do volume can often get costs lowered for the project which can sometimes negate their fees you have to pay.
It's really about what life you want to live. Personally I did not want to be a full time retail center developer. Instead I like brokering as a principal broker and owner of my company clients buying existing properties and then I buy value-add to reposition myself mainly single tenant.
Doing that I make 7 to 8 figures a year profit to myself. Depends on equity upside positions in my properties after stabilization and also how many broker deals I do that year. One is immediate income to the bank and the other is upside equity and some of the cash flow ongoing.
If there is not an association you are part of or deed restrictions it can help make it easier to develop the land because then you are getting county or city approval for zoning type and site type. Some parts of Texas do not have zoning but other hurdles to cross.
- 2yRonald RohdePro MemberAttorney 路 Dallas, TX 路 Member since 2016 路 5k+ posts 路 2k+ votes
Are you looking for a developer or just a GC? Very different functions and have you priced the land just to sell?
- 2yMichael K GallagherBusiness MemberReal Estate Agent 路 Columbus OH 路 Member since 2018 路 1k+ posts 路 1k+ votes
@Account Closed if the building is going to be near an HEB and there is not already an urgent care in the area, I'm actively working on an expansion with a regional UC group in San antonio (did two additional units with them last year). Would love to hear more when you get the project up and running, we'd be interested in potentially filling an endcap or doing a FSSTB if there are outlots available, and if the market demographics are there.
- Rental Property Investor 路 New Braunfels, TX 路 Member since 2022 路 409 posts 路 408 votes2ySounds like Pearsall Tx, I stop at that HEB everytime I go to hunting camp. Best of luck.
Quote from @Account Closed:
Hello,
I am building a retail strip mall about 45 minutes south of San Antonio, TX. - Member since 2023 路 3 posts 路 2 votes2y
Quote from @Account Closed:
Sounds like Pearsall Tx, I stop at that HEB everytime I go to hunting camp. Best of luck.Quote from @Account Closed:
Hello,
I am building a retail strip mall about 45 minutes south of San Antonio, TX.Thank you Kristi 馃槈
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