All Forum Posts by: Cason Acor

Environmental could be a substantial issue. Meaning ground contamination. 

A senior living facility represents a greater risk right now for the lender because of the pandemic. Hotels, multi-tenant retail, and seniors housing are the product types that have been hit the hardest by the coronavirus recession. I’d imagine the lender is factoring that into the quote that they’re giving you. A year ago, it probably would have been a different story. 

There's going to be a huge price difference between steel and tilt-up construction, as well as tenant demand. Steel is the cheapest and least desirable, and tilt-up is of course the most expensive, but most desirable. In my market, for a ground up new tilt-up building the size you're describing, I'd expect to pay closer to $150/SF. 

Henry Clark also laid out other good things to consider. Running utilities to the property can get very expensive very quickly. Try and build on a lot that already has utilities ran to it, or very close.

How quickly is she wanting to sell? I think you’re going to have to rein in her expectations on this one. The biggest problem you’re going to run into is that land deals usually spend a lot of time in escrow. No developer/retailer is going to close without making sure zoning, entitlements, surveys, and building plans are all done and approved. All that takes a very long time. Deals like this can easily spend six months to more than a year under contract before closing. 

Sounds like it could be an opportunity for executive office suites, which are exactly as you described. Similar to co-working space, but with much fewer shared amenities. 

I think first steps would be to dispute the appraisal, on the grounds that you just shared with us. The bank should order a new appraisal from a different appraiser. 

My guess is Best Buy wanted a rent discount due to COVID and decreasing brick and mortar sales, and the landlord said no. They probably asked to pay less, maybe significantly less, than they were currently paying. The landlord must be pretty confident in their ability to re-tenant the building, and/or aren’t pressed to make their mortgage after Best Buy leaves. 

I see mostly 30-35%, unless it’s SBA. 

Since you’ll be occupying the unit, I would approach the purchase from a cost per square foot perspective, not cap rate.

I’m not a fan of CREXI. I find CoStar to be more reliable, and even then it’s far from perfect.

Commercial real estate is also a lot less centralized than residential. At least at my firm, putting our listings up on sites like LoopNet and CREXI is often a last resort. I would recommend directly reaching out to industrial brokers in your area and asking what inventory they have available. 

What specific features in an industrial property is your client looking for?