I am interested in a vacant lot which is zoned commercial, it is an outparcel beside a shopping mall that is anchored by Kroger. I am looking at a few different strategies if I buy this. I can sell this as is or build a "blank building" and allow another business to purchase this and modify it to their needs and taste. I am working with an agent who is also a builder and property manager that works 10 minutes from this area. It is going to need at least 15k of fill dirt in site preparation and the cost of the structure would be around $250k. I am still in the early stages of researching this and doing due diligence but I was hoping to hear from the BP community if you have any advice and if someone already built a blank structure before without securing a buyer/tenant. BTW when I mention a blank building I mean a slab with foundation, water, plumbing, HVAC. Obviously there will be a difference in cost to do the plumbing for a casual dining restaurant and an insurance office
@Matthew Shay One option would be to advertise the land for lease and say that you are willing to build the building to the tenant's needs. If time is an issue you could put up a building with a vanilla shell that they could then build to their own needs. Another option would be to just land lease the lot and let the tenant do what every they want with it.
I forgot to mention one really important point. There is a deed restriction given in favor of an anchor tenant. I tried calling them and the closest I got was to the representative of one of the district offices. He told me that as long as there is no competition they would allow it. The county has a value of 30k b/c of the deed restriction but if there was no restriction it would be at $7/ft and this is almost 1 acre. Based on the property card this was bought for 1.3MM in 2003 and then changed hands thru a fund for 10MM in 2007 (I am guessing that was part of a portfolio purchase) I would be interested in flipping the land if the values are that high but I need to gather more information about this. If the anchor tenant goes out of business or moves (highly unlikely I'm guessing) the value would increase a lot due to the easing of the deed restriction. Not interested in gambling and holding onto this for a few years. The funny thing is that I don't think this was ever listed on the market and I was told that the present owner never proposed anything to build to the anchor tenant. But I think that is common with many owners that are institutional banks
@Matthew Shay Sounds like you could have a good deal if you can get a release from the current tenant. I would keep calling them every day until you get someone who can help you at Kroger. Do you have the full text for the deed restriction?
Look at highest and best use for the STNL tenant type. Then look at deed restriction and what could not go there. Then take next best highest and use tenant and figure out rent per sq ft they could pay.
You could possibly sell the land to an end user tenant, sell the land to a developer and make a spread, ground lease the land, or do a NN or NNN lease and construct the building.
You need to analyze the tax implications of selling outright and paying higher short term gains capital tax versus developing and then converting to a new value created loan of 65 to 75% LTV.