Commercial strip mall

9 Replies

Hi,

I’m just getting started in commercial investment. I’m currently trying to buy a 4acre commercial parcel and was curious to know a couple things:

1. What approximate cost for construction? Considering parking lot and other items needed...

2. I would like 1 or 2 national tenants ( like aspen dental, T-Mobile,etc..) Who do I contact to see if they are interested?

Thanks in advance for your help,

Francesco 

You put the land under contract and then go for lease commitments and zoning approval BEFORE going hard with the earnest money.

Originally posted by @Joel Owens :

You put the land under contract and then go for lease commitments and zoning approval BEFORE going hard with the earnest money.

Thanks for response. I currently have the seller of parcel close to the purchase price I’m shooting for and I also included a 120 day due diligence period to make sure all my numbers make sense. The land is already commercial and I spoke with the township and they confirmed that I could build a strip mall.

My next step would be to do a feasibility study...

You need to see WHAT RENTS you could get before closing on this land for purchase.

If you are getting the land for cheap then whether getting national tenants, regional, or mom and pop there still might be profit to be made.

If you are paying close to market or a premium you need to get the commitment from the national tenants before you close otherwise you could get smaller rents than expected from regional to mom and pop tenants when nationals pass on the site. 

In this area rents are between $12/$18 sf and the buildings are pretty outdated.

How do I get in contact with a national tenant? I don’t think I would have any issues finding mom and pop tenants but I would prefer to have National tenants 

Originally posted by @Francesco Bonura :

In this area rents are between $12/$18 sf and the buildings are pretty outdated.

How do I get in contact with a national tenant? I don’t think I would have any issues finding mom and pop tenants but I would prefer to have National tenants 

I have never done it, but from my own networking I know that they typically use law firms to negotiate leases on their behalf.  I would start off by finding a law firm that does that and start talking to them.  Other options would be to research individual national companies to determine who is responsible for finding new locations in-house and contact that person.

If buildings are outdated you are talking big bucks to get fix up exterior and interior improvements to a national brand format and image. Local to regionals might not be as picky.

National tenants sell for lower cap rates and tend to have more stability long term on the lease but they also are the most pickiest for locations and ideal site layouts.

You perform a void analysis and see what type of retail tenant would go there. Then check Google for how close a brand is too your site. Go to retail tenants website and find real estate department. Submit your info.   

Demographics are a huge huge driver in prices in the Retail real estate world. If you don't have shoppers a retailer will die, you literally could give away rent for free and still lose money as a retailer. As for national credit tenants most of them have a very specific demographics analysis that they use. For instance some national credit companies will not only specify an area but a certain corner. They also tend to have relationship with national REITs and commercial brokers like CBRE, JLL, etc.  Good luck to you and hopefully you have an awesome due diligence team. 

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