Thoughts on an industrial property purchase?
Greetings all. Long time reader, first time poster in this forum. I ran this by the "general" forum, but wanted to put this over here to maybe get a different set of eyes on it...I'm considering a possible industrial property that's for sale. I wanted to get some feedback on this deal. The specs:
-24,000+ sq ft industrial space on about 1 1/2 acres. The property itself is in good condition; new roof 3 yrs ago, 3 phase elec, solid HVAC, 16ft drive thru, 2 roll ups, 2 docks. needs no current upgrades(technically, everything except roof, structure and parking lot is tenants responsibility).
-triple net lease. 6 yrs left on current lease.
-tenant has a solid reputation. multiple locations throughout the midwest. i like the business, i like the long term prospects for the industry.
-depending on sale price, cap rate will be in the 8.8%-9.3% range(rent increases each year). Tenant paying under FMV; my agent thinks this could draw rent to equal 10-11% cap rate in 2024. It will probably sell in the $3.50-3.85/sq ft range.
CONS:
- the location is not a bad neighborhood per se, but it is a solidly industrial neighborhood. There are two buildings for sale in close proximity; one with tenants, one without. I can't say with complete confidence that I could put a tenant in it in 2024 if need be.
-It's sat on the market for almost a year. Either there's been offers and the seller doesn't wanna play ball, or there's something on this property I'm missing, cause good commercial deals don't sit very long right now in my market. I was told by the seller's agent that the seller "doesn't care if he sells it or not", because it's a solid earner and zero maintenance.
Any thoughts, one way or the other? Anything I'm not considering? Thanks.