What type of NNN/NN Investment would you prefer?

Question

I am current working with clients looking in these asset classes.  Each class has pros and cons.  Its been my experience that the property type that can most easily be re-used is best.  Think automotive...

Chet Mazur · Answer

I look for credit or national Tenants. Also reuse if it's a short term lease. Watch out for ground lease and what happens when they end. Look into companies you don't recognize. I look into companies you don't recognize. I  didn't recognize one, and they were like 90% owned by Berkshire Hathaway.

Tommy Ciccarone · Answer

@Joel Owens

Incredibly helpful thank you

Joel Owens · Answer

Pharmacy I like if I can get the rent per sq ft cheap. Some of the vintage leases have overinflated rents from when the developer built it new and gave heavy TI.

Walgreens is not doing as well as CVS currently. Over the years the trade places on who is doing better.

With any tenant I do not like top market rents. The business has to churn out amazing numbers to pencil for profitability and either the tenant will leave, want to renegotiate the rent, or sublease.

I look at rents per sq ft, cap rates historically, mortgage interest rates, etc.

Tommy Ciccarone · Answer

@Joel Owens

Great feedback.  We recently had a client with a Monroe Muffler go out.  In the time they were still there we negotiated with Mavis and have a new 10 year lease.  The site made a great fit and Mavis did all their own environmental.

What are your feelings on Pharmacy?

Joel Owens · Answer

Hi Tommy,

Glad to have another broker/agent on the forums.

I specialize in NNN retail also. I review about 1,000 a week for clients nationally. Automotive you have to be careful about environmental contamination and if there are clauses in the lease for the tenants to be on the hook for any clean up and return the property to a clean state.

I do like Auto Zone and Advance autos for my clients. They are typically built better and in better locations than Dollar stores. I am not a big fan of dollar stores. Typically sheet metal sides and back and in rural to weak suburban mid-block locations.