Retail broker recommendations in Phoenix area

[Huy Ngo]

Hello BP members,

I appreciate it if somebody could recommend a commercial broker who specializes in retail transactions in Phoenix area.

Thanks,

Will

[Joel Owens]

What kind of tenants do you want? National,regional,local? What price point putting 25% down? 2 million,5 million,10 million?

The reason I mention it is because it makes a big difference in that 7.5 cap rate. The interest rate the larger the loan you can shed off possibly 15 to 20 basis point on the rate. When you move into larger properties the cap rate increases some as there are less buyers able to afford them.

So a 5 million property might be 4.4 rate and a 7.5 cap. A 2 million property might be a 7 cap and a 4.7 rate. Loan is smaller so lenders not as competitive on rate and more buyers able to afford a 2 million property then a 6 or 7 million by themselves.

If you want all national tenant with 10 year leases newly built those are not  trading at a 7.5 cap rate. A developer who builds has a 9 to 10 cap rate to cost. So if I sold at a 7.5 cap rate minus my resale costs on a 9 cap with capital gains I am not making anything. I would rather convert construction loan to perm and take out 75% ltv and then go develop more again and keep the cash flow.

If you want all national tenants newly built with 10 year leases a 7 is about as good as it gets for 2 to 3 million type properties.

I look at over 1,000 properties a week nationally for clients so know what stuff is trading at.

If you are willing to take some national tenants to strong regionals then a 7.5 might be possible. 8 cap is mainly all mom and pop tenants with maybe some regionals.

I am talking stabilized properties. There are other ways to increase yield but that is a phone call to expand on.  

Hope it helps