Strip value mall investing

[Steve W.]

Hi,

I am located in the NYC metro area, and I am new to commercial real estate. I have an interest in investing in commercial strip malls. So far I have been looking around my area but compared to other locations outside NYC it seems that I can find better opportunities  outside my state. 

For those of you who have experience in this area, for strip malls, what are good locations to look into?

[Joel Owens]

TI = Tenant Improvements 

( What a new tenant needs to build out their space. Sometimes landlords give an allowance of so much per sq ft, partial,or none at all.)

LC = Leasing Commissions

Generally when a tenant leases up space they may or may not have a broker/agent representing them as a tenant rep. If the landlord has a tenant rep broker then some leasing commissions may be due.

Example: Starbucks signs a 10 year primary lease. First five years is 50,000 a year rent and next 5 years is 55,000 in rent. Leasing commissions are 6% total split between landlords agent and tenants agent. The leasing commission is paid upfront at lease signing with non-refundable earnest money from tenant so it's painful if they back out.

Years 1-5        50,000 X 5 = 250,000 base rent X .06 leasing commissions = 15,000 total

Years 6 -10     55,000 X 5 = 275,000 base rent X .06 leasing commissions = 16,500 total

31,500 leasing commissions paid

NNN - Absolute NNN lease where the tenant pays all costs. How the NNN is structured with the lease depends on if free standing single tenant net lease or if the retail tenant takes a inline space with other tenants in a retail center.