33% occupied because of existing tenant? - Flex Industrial

[Jim Pylman]

Hello Everybody - So here is the situation... I found an Off Market 15k sq ft industrial building here in Northern California. Its made up of 3-5,000 sq ft units of which only 1 is currently occupied. I originally contacted the owner because I noticed 1 unit went vacant(the back unit) and then a few month later the middle unit followed suit. Its now been 4 month and the current ownership says they've received little interest in the vacant units.

Here is what I think is going on! Unit #1 ,which is the frontage unit, is occupied by a Recycle Company that take in bottle and cans from the public. I have sat in the parking lot many times watching the comings and goings of a less than desirable crowd of folks some of which are homeless needless to say. Now I don't want to come off as a **hole.. I think that recycling is great and people have to make a few bucks here and there but I cant help but think that their presents steers any professional prospective tenants down the road! So here's the real question..

 If I close this deal, do I evict my ONLY tenant and start with a totally vacant building? If I do this, I would need to fill 2 units within the first 4 months or I would face a zero cash flow situation for the 1st year. I know the area and I feel confident in this market but the unknown has me on edge. By the way this would be my 1st Commercial deal so I am approaching everything cautiously. I would love to hear any suggestions.

[Adam Johnson]

You will need to understand the lease terms of the last tenant, you may not be able to evict, depends on the written lease terms which will survive the sale.

Any chance you can contact either or both of the former tenants? If so, ask THEM why they left. You may learn more about the property and landlord and/or confirm your suspicion about the recycling place. Either way, worth the effort.