We are in contract on a shopping center that has numerous vacancies. We would like to mail a flyer to business owners in our county. This would target business types that would be a good fit for the center. (Martial arts, fitness, certain types of medical, etc.)
I would appreciate any input from anyone who has done this and how it worked out.
Would not waste the time. I tried doing this on my own before and calling tons of tenants. Most have a tenant rep broker they use and connect you up with them.
Cap rate is usually tied to location ( urban,suburban,rural), location and quality of the tenants ( national, regional, mom and pop), and terms of the lease ( primary lease term in years, level of lease guarantee, rental increases, any termination rights, disclosure of sales, restrictive use rights, co-tenant anchor clauses,etc.).
You need a void analysis from a landlord rep leasing broker. This usually shows what is the highest and best use of your center and what is missing in the area for tenant mix. Martial arts and fitness pay low rents per sq ft compared to medical tenants. Medical tenants generate a lot more cash. I know I am a 3rd degree black belt. I looked at karate school model over a decade ago as an investment. It is more an owner operator business just generating enough income and profit to keep the lights on. Same with fitness so net worth of the person backing the lease is critical.
With medical they have high margins per customer and drives lots of profit. I have doctors as commercial retail clients and they all make tons of money I mean a lot each year.
@Michelle R. I am looking to do the same thing as I have some vacant medical office space to fill up. I have not really found any kind of commercial list provider for this so I am doing it manually by getting lists from yellow pages/chamber of commerce/associations. So if you find a good list provider please let me know.
Thanks @Joel Owens . I get what you are saying about karate and fitness not really being a scale-able business model and being at barely breakeven levels for the owner. Definitely it would be important to vet the net worth of the owner/operator. I have seen a local strip (not mine), where a karate tenant was paying as much as we could get from medical tenants. This particular outfit was one of three locations owned by same operator. That would be the ideal target.
This shopping center is pretty much covered with all types of food uses, and even most types of medical are covered. Some more specialized medical uses such as physical therapy, gynecology, audiology are not yet present and would make great additions.
My thought was to send out targeted mailings to already existing medical offices. I have had a poor experience with commercial brokers in two different areas of NJ, both on the sales and leasing side. They typically just list the property to Costar and see what inquiries they get. By sending out mailings, we would get a result better and faster than what our local brokers are able to achieve. We would also post on our own to Costar, with a brokers protected statement, and still pay that full commission. But we have been burned before giving exclusivity and having brokers park our listing with broker making zero effort.
We also have seen the issue with numerous brokers local to us, that they do not want to co-broker a deal. Obviously they are supposed to, but they never bring people through with another broker. We are paying 6% commission and were told, basically, if we want to get other brokers interested, we have to pay more than this to keep both sides interested. This seems crazy to me. I am on verge of firing one broker who has parked three of my spaces in South Jersey with hardly any showings.
Being as we want to get our property in front of people who already own businesses, we are looking to buy a list of local operators in our area. Just not sure how to go about doing so.
@Michelle R. Though I'm starting out in this world, I can see, and have seen through others in the industry, your frustration with commercial brokers. I constantly see people say using them is your only option or they are the only ones that can make things.
Not trying to get into any debates about their position in the industry but its encouraging seeing your successes managing the process on your own.
You can contact a list broker about getting business listings from a number of sources. They might recommend that general listings can be obtained with the D&B file. There are also specialized medical files where you can specify practice size and other pertinent factors that would help qualify a business for your space.
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