Looking for assistance with due dilligence north of Atlanta GA - Retail + Office expertise

4 Replies

We are going to potentially make an offer on retail and office opportunity that is over 50% vacant. We will do some of our own due diligence, but are looking for further assistance to make sure that we end up with a smart buy.

Can I get any recommendations for companies or service providers that are great with doing due diligence on these purchases? Including rent research, market research, etc.

Local brokers always help. 

Ben get a commercial property management company to give you some research locally.

If this retail/office is only 5,000 to 10,000 sq ft they will not be excited about it. If it's a larger property they might try to land the management business from you.

A VOID ANALYSIS is performed to see what tenants are missing for the area that would be optimal for the center.

Lot's more things go into it.  If you are getting a loan with a lender on a larger property they will not want you self managing. They will want a large commercial firm with a track record. At 50% vacant likely they will want recourse. 

@Jeremy Wynn , thanks, that is actually what I ended up doing. Hopefully I picked a good broker. May keep looking in parallel.

@Joel Owens      Void Analysis sounds very interesting and useful. Would a local broker be able to offer that?

The nice thing about this deal is owner finance for 3 years. It has 22000 square feet, so I"m hoping we can bring on a well established and motivated commercial broker.

My thinking is to bring on a commercial broker who specializes in both the acquisition and leasing, and keep all of the work in-house.

Am I right to assume:

1. We conduct basic market analysis, and decide whether the price is right to us.

2. Make an offer, enter due diligence.

3. During due diligence, negotiate further with the seller on issues that come up during inspection. And, come up with a turn-around strategy including capex, marketing, discounts, etc. How specific would this turn-around strategy get? Would we use something like a void analysis to guess who would be appropriate tenants? 

4. Once the deal closes, the same agent, or another agent in the office immediately begins managing the turn around, doing capex for visuals (signs, landscaping), while managing the capex for per unit customization as tenants express interest and sign contracts.

There are specific companies that work on turn around for retail.

The leasing side is very different from the acquisition side.  I do not conduct any leasing but instead do sales for my clients. I know companies that manage millions of sq ft my clients use.

Biggest thing is are rents per sq ft at market for the area with current leases?? If not you need to mark to market the per sq ft.

You will have TI and leasing commissions for the empty spaces. If it is not a national tenant you do not want to give TI as if they go under in one to two years you won't get the money back. Instead you could offer free rent and they front the build out costs. If they go out you had the rent and are not trying to make back TI costs.  

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