Finding Tenants for Commercial Space

[Ben Hansen]

I'm looking to make the transition from residential to commercial investing and think I've identified an opportunity with a restaurant space in a pretty attractive area. 

Problem is I'm not sure what the best outlets are for finding a tenant to fill the space. Based on my research so far it looks like using a commercial agent/broker is the best option, but I'm wondering if there are other resources people use that I'm not thinking of.

 Any advice is much appreciated.   

[Joel Owens]

More local to regional tenants will seek you out on their own for space. National tenants tend to have chosen brokers for a state,county etc. they work with to scrub sites.

The real estate department heads at national companies and brand names are very busy. They do not have time to scrub crap sites, mediocre sites, newbies who do not know what they are doing,etc. They use tenant rep brokers to do that and then present to them if it looks promising.

An exception is if you have an incredible site and limited options then they might deal with you directly. If your site is a B site then they will generally put you against 2 to 3 other sites and see who gives them the best deal to go there.

You need landlord/tenant rep brokers. I do not do any of that as it is low income to me. If Starbucks signs for 5 years for 500k then at 3% I only make 15k. They can take 6 months to do a lease. In the same time frame I can close the sale on a retail center and make 6 figures in commission representing a buyer.

Broker highest to lowest return on time:

1. Syndicating as a sponsor and making fees for commission plus equity share on the back end.

2. Being a transactional broker and getting the commission on a purchase of a retail center.

3. Being a tenant rep or landlord broker for procuring tenants and getting leases signed.

4. Property management- lowest of the low for returns and big headache. People should only do this if they love that type of work.