Looking to analyze a commercial office building

3 Replies

I'm starting off I inherited some very good commercial rental properties and am looking at another to invest into I'm looking to buy and hold , it is listed with a big broker, the property is 100% occupied by large tenants they have leases till 2022 with 5 year options.ot is a 16000 sq ft office built 1986 with elevator, 100 parking spaces. The proforma says 442k per year gross rent 34k maintenance and 133k taxes per year ,I checked the town on taxes only as up to 116k taxes ,. Asking 4.4m, my question is how do I approach the broker to get the actual #s and start my own real breakdown, I'm not afraid of the bigger numbers I am in my and have been managing the property I inherited for over 7 years I'm a newbie to investing but not to being a landlord as much my personal opinion is commercial is so much easier and profitable. I always was shown to think bigger, just do it intelligently thank you for any advice

Hi Efrain, 

I am a commercial real estate banker. The sales broker could potentially get you historical operating statements or at the very least atleast a T-12, so that that you dont have to underwrite based on just proforma. You want to atleast know the historical occupancy, so feel free to ask the sales broker for any historical operating information.

And side note- you mentioned you were looking to buy and hold. I focus on cmbs lending and securitzation, so 10 year fixed rate non recourse loans are my main product type and they are popular amongst long term hold buyers. Feel free to use me as a resource, happy to help in any way I can.

A multi-tenant office building is anything but passive and you must know how to OPERATE this property in order to make it profitable. There is a lot to know and understand about the building systems, service contracts, leases and lease types, insurance, the list goes on. Without this baseline knowledge, I would strongly recommend against going this route on your first deal. But once you have this knowledge, it can be a great vehicle; multi-tenant office is what I will eventually own and operate once I've built up my capital substantially. Good luck.

Originally posted by @Eduardo Zepeda :

A multi-tenant office building is anything but passive and you must know how to OPERATE this property in order to make it profitable. There is a lot to know and understand about the building systems, service contracts, leases and lease types, insurance, the list goes on. Without this baseline knowledge, I would strongly recommend against going this route on your first deal. But once you have this knowledge, it can be a great vehicle; multi-tenant office is what I will eventually own and operate once I've built up my capital substantially. Good luck.

Couldn't agree more, Eduardo. I own a 7500 commercial office property with several tenants on gross leases, and I have a property manager oversee the day to day stuff. It has required a surprising amount of "running interference" on repairs or maintenance issues.

The only commercial property in my portfolio that I self manage is a flex industrial property with two tenants on net leases currently.  Pretty quiet for the most part, but I do have a good relationship with several local contractor and also a commercial real estate broker with his SIOR designation to handle lease ups/negotiations.