Marquis mixed use retail/restaurant/office analysis help

[Marcello Di Gerlando]

Take a look at the details below and please give me your opinion using CCIM/Rule of thumb/beer-math/inter web BP analysis and tell me if this deal is worth a closer look or should I shelve it without a second though. Much appreciated.

I'm looking at purchasing a marquis building in downtown Colorado Springs. Currently a crappy sports bar with no cool factor at all which has been operating miserably out of this space for as long as I can remember. The building is a former haberdasher/clothing store with 1900 charm. There was 2004 remodel that updated mechanical, electrical and sprinkler systems. It has a kitchen and a liquor license. 2 floors of lease space. I anticipate sub dividing and remodeling to incorporate mix retail/office and bar-restaurant spaces with a lot of cool factor; multiple tenets. I'm not interested in operating a business out of there myself. I'm simply interested in this space for the real estate potential.

16,000sf downtown marquis building asking $3MM. 

I'm anticipating a $1.2MM remodel and a 1yr holding costs of 250K. 

30% equity position with down payment on on the full $4.2MM. (Building plus rehab)

After rehab lease space should average $25sqft NNN. With the potential to ask for $50sqft NNN.

ARV once fully leased. $5MM

happy to share more info. let me know what metrics and details you need.

Thanks 

Marcello

[Greg Dickerson]

Originally posted by @Marcello Di Gerlando:

@Greg Dickerson

Thanks. 30%. sounds like a very safe margin.

I've heard the term soft costs used by residential developers when separating costs of land, debt service and the hard costs of construction. The rule of thumb understanding I have is that soft costs should not exceed 15% of hard costs. Have you heard this before or anything similar? I want to be able to plug in different assumptions and war game this project in excel.  Do you know of any proforma calculators I could use? Thanks.

There are no rules of thumb for hard or soft costs. The costs are what they are so you need to get quotes.

For modeling check out https://www.adventuresincre.co...