| There
are a great deal of retail buildings in the
market place. The most basic is the strip
center, or the neighborhood center. The center
consists of a group of contiguous stores located
in one or a series of buildings situated on
a strip of land.
NO MATTER WHICH RETAIL INVESTMENT
YOU CONSIDER, DO NOT FORGET THE FIRST RULE
OF REAL ESTATE, LOCATION, LOCATION, LOCATION.
Market and Location
The property should have good visual exposure
from adjacent streets and/or major roads,
freeways/highways. In other words you should
have no problem finding the retail location
that you are seeking as a consumer.
The property should also be in an area that
is heavily populated by both vehicular and
pedestrian traffic. Automotive Traffic is
measured by Average Daily Trips or ADT's.
The rental income
from the center, no matter what type of tenant
comes from base rent and percentage rent.
In exchange for a lower base rent some tenants
opt to pay the landlord a contingent rent
called the "percentage rent"
Property Condition and Characteristics
Should have configuration for truck ingress,
egress, accessibility and minimizing traffic
flow congestion.
Store frontage, depth and overall size should
be appropriate for the market.
Second story retail is commonly discounted
unless long-term, strong tenancy and quantifiable
market information is used to support.
Minimum parking ratio of 4.0 spaces per 1,000
Net Rental Area. Higher parking ratios may
be required for tenants with higher parking
demands such as restaurants, theaters and
grocery.
For further discussion of
retail buildings loans and their respective
underwriting requirements please follow the
above link. |
