Good deal? Buying an Office space

[Dharmesh B.]

Hi,

Commercial real estate deal analysis is hurting my head. I think I am close but not sure. Will you please analyze this deal and confirm if I my process/analysis is right? Feel free to share where I’m messing up.

Office is in a building where there are other office units owned by someone else. This specific unit is for sale. The office space is large enough where it has 4-5 office cubes and 1-2 conference rooms (2220 sq ft).

Base rate broker shared was $15/sqft/yr but I am being little cautious and using $13/sqft/yr in my calculation. Since the property has been vacant for last 6-12 months there’s no rent roll. Owner moved to a larger space as they experienced growth in their business.

Assuming I will be able to find a NNN lease tenant (learned that's what it is called where tenant pays the operating expenses).

Office association charges monthly payment that covers 100% utilities and CAM. Added this in my Utilities line item.

Is this a good offer, $350,000 for listing price of $400,000? Cap Rate is very low even though it shows good CoC and IRR.