Begginer questuion! Financing for building a shopping center.
Member since 2019 · 2 posts · 1 vote
Begginer questuion! Financing for building a shopping center.
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Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6yOriginally posted by @Jonathan Navarrete:
Hello! We have a few vacant lots in a very attractive location in Texas. They just built an H-E-B (Grocery Store) in front of our lots. I was planning in a near future to build a Shopping center, but I dont know where to start to get finance for such project.
You get financing for projects like this from local and regional commercial banks. Once you decide the project will work you need to put together a complete package including your financials, business plan, plans and specs, GC contract etc for the bank.
First you need to do a quick feasibility exercise to determine if the project will work financially. Start with the potential gross income and work backwards from there.
Check with the city or county planning and zoning department to get an idea of what you can build and what is required for all approvals including site plan and building permits, proffers, water/sewer tap fees, bonding requirements, inspections and CO process and time frame for all approvals.
You also need to check with the utility companies and get an idea of availability and cost estimates from them for water, sewer, power, gas, cable, installation and connection requirements, tap fees, hookup charges, transformer location and relocation, power line and power pole relocation issues. Check to see if you have to install any manholes, fire hydrants, curb, gutter, sidewalks, street signs, street lighting any specific street design or access requirements, Check DOT requirements for access, stop lights and permits, traffic studies, DWQ requirements for permits, permit fees and time frames.
Once you have an idea of what you can build and what is required in terms of permitting and infrastructure you want to talk to some civil engineers, architects and commercial general contractors that do the type of projects and build the type of buildings you want to build so you can get an idea of costs, time frame and requirements.
This is a broad overview of the process and your civil engineer can handle all of this but it's good for you to know exactly what's required.
3 Replies
- Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes6y
Originally posted by @Jonathan Navarrete:
Hello! We have a few vacant lots in a very attractive location in Texas. They just built an H-E-B (Grocery Store) in front of our lots. I was planning in a near future to build a Shopping center, but I dont know where to start to get finance for such project.
You get financing for projects like this from local and regional commercial banks. Once you decide the project will work you need to put together a complete package including your financials, business plan, plans and specs, GC contract etc for the bank.
First you need to do a quick feasibility exercise to determine if the project will work financially. Start with the potential gross income and work backwards from there.Check with the city or county planning and zoning department to get an idea of what you can build and what is required for all approvals including site plan and building permits, proffers, water/sewer tap fees, bonding requirements, inspections and CO process and time frame for all approvals.
You also need to check with the utility companies and get an idea of availability and cost estimates from them for water, sewer, power, gas, cable, installation and connection requirements, tap fees, hookup charges, transformer location and relocation, power line and power pole relocation issues. Check to see if you have to install any manholes, fire hydrants, curb, gutter, sidewalks, street signs, street lighting any specific street design or access requirements, Check DOT requirements for access, stop lights and permits, traffic studies, DWQ requirements for permits, permit fees and time frames.
Once you have an idea of what you can build and what is required in terms of permitting and infrastructure you want to talk to some civil engineers, architects and commercial general contractors that do the type of projects and build the type of buildings you want to build so you can get an idea of costs, time frame and requirements.
This is a broad overview of the process and your civil engineer can handle all of this but it's good for you to know exactly what's required.
- Lender · Hutto, TX · Member since 2017 · 95 posts · 60 votes6y
@Jonathan Navarrete
What city in Texas? I'm outside of Austin. HEB is a strong draw.
Definitely check with planning and zoning and see what has been permitted recently for retail space. There could be a flood about to hit the marker which could make it tough to lease your space.
Talk to the local economic development corporation and ask them what they're missing out on from a retail space. It could be that specialty medical or something more unique than just straight up retail space is in demand. Google other HEBs and see what tends to go in around them.
Get with an architect and have them draft some basic renderings based on what you have.
Draft up a proforma of rent, debt service, etc so you can show the property cash flowing. They will likely lend to you on a speculative basis with a 20% to 30% down payment. Terms can change as you get commitments. Its safe to assume three to five year leases and NNN to pass through the utilities, maintenance, and taxes.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes6y
You need to qualify ( they built HEB in front of our lots).
If you are off from the road and they put a big shopping center in front of your lots than not many retailers will want them.
They tend to want to be on the main road frontage and then the daily traffic to the large anchor HEB feeds the smaller STNL buildings for business. If you have a giant building in front of your lots you have no sightlines. Doesn't mean other tenant types might not want it but retail many will say no to the site. Now if you have a cross road on a corner and your lots are to the side that still might work.
You really need to converse with developers and leasing brokers for the asset class you want to potentially develop. Engineers and all those companies will easily take your money and run up tens of thousands to over 100k in fees to make fancy drawings and reports. Before doing that you need to know what you have and don't have for dirt value and if it is feasible. Some land owners will JV with a large developer and let them do the cash outlay upfront to spread the risk.
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