Abandoned Box stores?

[Charlie E.]

I know there is a bunch of abandoned box stores with no tenants, but when I go to loopnet.com I see very little offered. Since I am thinking about investing in this sector I would like to find a resource that can show me all of the vacant box stores waiting for a new buyer?

Suggestions?

[Joel Owens]

It depends on the box size, where it is at location wise and demographics, site lines, access with cross traffic, and if dark but current tenant still paying or totally vacant.

Smaller box sizes usually have a long list of tenants waiting to go into the spaces in strong markets. You have to be careful with what I call (cap drop).

For instance you might see as dark Rite Aid with 7 years left on the lease. Lenders do not like to finance dark stores so usually all cash purchases. The current Rite Aid could be at 25 a foot for the 10,000 sq ft box. You buy it at a 10 cap for 2,500,000. With 7 years left on primary the cash rent value not adjusted for inflation is 1,750,000.

If the next tenants will only pay 20 a foot then you can lose money. Say new 15 year lease is 200,000 starting NOI. 10 cap value is 2,000,000 and 2,600,000 is about a 7.5 cap. The key is you want to buy high cap rate on dark value based on current market rents or below and not on in place if rates per ft are inflated.