Estimate downtime period, TI, and other market characteristics

Member since 2021 · 4 posts · 0 votes

Hello, I am a multifamily investor and I would like to start acquiring retail real estate.

In order to properly underwrite deals I need to know the average downtime between leases if the previous tenant doesn't want to renew, to know the common lease terms in the market such as the number of free months, tenant improvements allowance, etc.

In multifamily I could find indicators in the Costar reports but in retail I don't know how to evaluate the downtime between leases, the only information I can find is the vacancy percentage.

How do retail investors estimate these numbers?

Thank you very much

0 Reply

32 views

Most Popular Reply

Account Closed

Investor · Atlanta, GA · Member since 2017 · 174 posts · 104 votes

Call a few leasing brokers in the submarket and you will have a wealth of knowledge needed.

1 Reply

See this reply in the discussion

3 Replies

Jump to latestLatest

Sort by

Account Closed
Investor · Atlanta, GA · Member since 2017 · 174 posts · 104 votes
4y
Call a few leasing brokers in the submarket and you will have a wealth of knowledge needed.
1 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
4y
Are you just running models? Retail is long--depending on the space and demand. If you need to know this, I wouldn't buy a low occupancy building to start. Why not just budget 6-12 months?
0 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
4y
The answer is you have brokers that transact in retail that are specialists. Your questions asked are just one component to owning retail properties. Retail leasing brokers often know about putting leases together but often do not know much about the other aspects. That is why buyers work with commercial retail brokers that have decades of experience and are investors themselves.
There is some street knowledge that comes with experience that Costar and other reports just can't give you like knowing and reviewing thousands of properties a week for sale across the country what types of tenants stay and which you see go out of business the most.
You could have a great lease but a weak tenant so means nothing when they go dark early. You could also have overinflated market rents in place for the cap rate you are paying and when those tenants leave the new lease rate your cap rate value drops with reduced cash flow.
Good luck
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.