Developing a commercial strip center

[Asad Jamal]

Hey everyone, 

I have an opportunity to put a commercial strip center on a 10 acre lot in a nice location. We were thinking about seeing if a bank would be interested in leasing part of the lot on a long-term basis and then building a strip of units in the back to lease to different types of businesses. My question is, how do I reach out to see who would be interested in leasing?(bank, car wash, etc.) Do we look for vendors first and then build the units or do we build the units first and then find vendors. I understand a bank would just want to lease long-term and then build to suit on themselves and small businesses would come after the units are built, at least that's how I envision it. I wanted to get thoughts and ideas from someone who's done something similar to this. I would really appreciate it. Thank you in advance.

-AJ 

[Joel Owens]

If you do not have a lengthy track record most bank lenders will REQUIRE at least 50% of the expected project pre-leased for funding. They want to know worse case scenario with the loan that you can come close to or break even with debt service if you struggle to lease up the remainder of the space after the building is finished.

Some developers I know do not have this condition on them but have developed strip centers for decades and build about 10  new ones a year. They have proven over and over again to the lenders they use so the lender do not put the pre-lease requirements on them anymore as they are a proven commodity.