I'm new to this forum! I'm an ER physician with no real estate experience, but I have always wanted to get in. Now might be the time...
My father owns 2 adjacent lots (combined 1.3 acres) in MD since the 1970s. There's one leased residental home on each lot, however the zoning on both were recently changed to CSC. He asked me if I wanted to do something with the space, the project's mine!
I've met with a couple architects. Rough estimates have us at 16K sq ft buildable space for single story, and 20K for 2 stories.
Looking at the surrounding area, to my inexperienced eye, the project seems like a no brainer. This is a main road with HIGH traffic. There are tons of stores (starbucks, 711, Mcdonalds, rite aid, Lowes) etc with a 1/2 mile radius.
My main question is - how do I figure out the best use of the space? I've talked to random real estate agents who know the area and have taken their opinions. I think it will come down to retail rental (small strip vs. one big store) vs medial building.
Is common sense, googlemaps, and knowledge gained from speaking to the agents enough to decide on the best use? Or do you suggest a formal market study / demographics / traffic count? If so can one point me in the right direction? Anything else I should be doing at this point?
I would also be interested in a consultant for hire that can answer questions / provide insight thru this process.
That does sound like a tremendous opportunity. As for highest and best use If I were in your shoes I seek out a commercial appraiser with the MAI designation. They will generate a solid idea on what direction to go.
Welcome to BP,
Appraisers will want a ton of cash. An appraisal isn't bad just know likely you will spend thousands for this report.
A local commercial land broker with a track record would be good to run things by. You mentioned you talked to agents but not what kind.
In commercial this is very important WHO you are talking to. Those agents might not have the credentials to give you the most credible information.
Is the goal to build this out and hold for a few years and sell?? OR Is it to hold long term for generation for the family.
You said you have main road frontage but is it a corner?? How far away is new development from you?? You said Starbucks etc. is a half mile away. That can be a lifetime in commercial for valuation purposes and use. You could have the old side of town and then 1/2 mile away all the growth is going the other direction.
You need to look at the current and future land use map for your area. Then look at what current zoning is and then what the county or city wants it to go to for the future. Then define the highest and best use for the land with single or multi tenant.
Work from the top submitting your site to large corporations for a fit as they tend to pay more than local mom and pop businesses and give more rents for great locations.
Not knowing the details, i'd say if you want to create long term income, look into a land lease arrangement, get a commercial broker to market it as such and lease out to a retail developer who will build and pay you rent every month. If you want out asap , get a broker to sell it.
If you want something hands on, i'd say develop. But with no experience, it will not be easy.
Thanks for your responses!
I spoke to a couple of commercial real estate brokers who have been leasing property in the area for 30+ years. What is the difference is between them and a commercial land broker?
If retail strip – the plan was to build, rent and hold long term. If medical center – plan is to either build and rent or sell, not sure which.
It is not on a corner, but in the center of a lot of existing stores / restaurants etc. See maps below!
I am not familiar with future land use map, I’m assuming I can get this from the count?
What is an MAI designation?
I know this a difficult project for a beginner but the opportunity is there and seems too good to pass up. I was hoping to figure out the best use of the land and then hire a full service firm (including architecture, engineering, permits,e tc) to get me a full set of plans. I know this will be expensive but without any experience I feel like I must go that route.
One good place to befriend and spend some time is in the city planner's office. They can not only tell you what type of zoning your property has but also can give you direction on whether re-zoning is realistic and from there you can also get closer to determining your highest and best use.
If you plan on developing yourself then you'll be getting to know these folks plenty well. Usually they are more than happy to talk to landowners. Maybe continue to talk to some commercial RE brokers and keep on getting familiarized with the lingo first though.
the properties are zoned CSC (commercial shopping center). They do not need to be rezoned.
You would still need to get your specific site plan approved.
One component is zoning and the other is the site plan you want to build.
Joel thanks for your response! Would you mind answering a couple of the questions in my previous post? (about 3-4 posts up)
What about hiring a company to do a marketing study / analysis? Can anyone recommend such a company?
Also would anyone mind explaining what would be the difference between that and using a commercial appraiser w/ MAI designation?
I have little to contribute here other than to wave to a fellow Bethesda resident. Maybe our paths will cross at some point, nice to run into you here.
Joel, would it be beneficial for Manish to speak with a CCIM? When I took the courses, it provided lots of useful info on market analysis and financial valuation but it's been about 7 years.
@Manish A. Find one of the big commercial brokers, talk to him like you want to sell this parcel, and find out who you are going to be marketing to. Thats a free educated market opinion, maybe the cost of lunch.
MAI is essentially the highest designation you can receive as an appraiser of commercial, residential, and industrial real estate. Many MAI's will specialize in a specific area of real estate. I think once you've narrowed down what you want to build it's a good idea obtain a feasibility study. And it might not set you back more than 15k-20k give or take depending on the requirements, bank requirements etc.
I agree with Joel, speak with an experienced broker regarding potential retail & med office ideas. I would speak to broker's that have contacts with national credit tenants to lease your space as well. Talk with local developers that have built and leased space in your area. You could potentially use their expertise in exchange for developing the site. The more local experts you speak with the better. Make it easy for the professionals to meet with you, i.e. stop by office, meet at the coffee shop across from their office, etc. Make sure you respect their time.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing