All Forum Posts by: Steven McPherson

Offering this 4-unit SFR rental portfolio for sale. All units must be sold together.

- Asking $625,000

- 75% leased (one available for lease)

- Long term tenants and stability

- See LINK for more details and contact information.

Melissa - I'd love to connect.  I am a retail broker in DFW but our office has broker connections to Austin and its surrounding market.  Feel free to DM me and I can provide some further guidance and put you in touch with someone.

What market are you located in? Overall, CRE is tough in finding deals right now regardless of asset class, and people are pessimistic about the next few years. In my area (DFW), we're seeing that smaller, one-story office is doing well. Medical/dental office is very strong and will remain that way. Multi-story CBD office buildings in downtown urban areas are the product that is struggling.

When you say temporary, infrequent use, are you speaking about leasing smaller Executive Offices or running a business similar to WeWork?

The 10-year is pessimistic about the next few years. There is no way sellers are selling at caps that high unless there is a special circumstance, so buyers just aren't buying. When I see deals that do pencil for an investor, the LTV is 60% or less (I deal with mostly retail and industrial). The CRE market is tough right now.

I used to work in Planning & Zoning.  Henry Clark had a great response above, but you can also just reach out to a Planner in the City Planning & Zoning department if you are still unfamiliar.  They can inform you of the process and the chances of your proposed use getting approved by P&Z and/or City Council.

It depends on the market and the mall.  I can only speak to the Texas market, where malls that focus on creating consumer experiences (coffee shops, kids play area, entertainment-based tenants) are still performing well even in this age of online shopping.  The indoor malls that simply offered shopping and a food court are the ones dying off.

I've seen some malls be demolished and replaced with high-density single family developments.  It all depends on how the deal pencils.

I can't speak to the Denver market since I'm in DFW, and obviously can't speak to the specifics of your building since there are so many varying factors.  But I agree with an above poster that $10 psf in tenant improvement seems low, unless you can find a turn-key tenant to occupy that will require very little renovation.

In DFW, for 2nd generation spaces, I've seen LLs underwrite at about $25-35 psf in expected TI allowance (subject to the lease terms and tenant credit rating).  If it is a cold dark shell, we would do $60-65 psf.  And also, I see many LLs simply offer several months of free rent in lieu of TI if it's a tenant that fits.  Also, make sure you account for broker commissions if you choose to use one to lease your building.

Best bit of advice I have, get in touch with a local commercial broker who specializes in that asset class if you haven't already.  They will be your best source of information on how to underwrite these deals and what to expect in your market.

Is this a 2nd generation space or a shell?  Are you offering TI packages?  Sounds like pricing might be turning off some prospective buyers.  Have your brokers made calls to tenants in the area that they feel might fit well in that space?

I know you said your property is mixed-use, but what asset class specifically? I always try to use NNN when possible since it provides the most financial advantages for the owner and protects them from fluctuations in taxes and property insurance (which is a huge protection here in Texas). Typically, you see full-service (gross) leases being used for CBD office buildings, but most of the retail centers in my market are on a NNN lease.

You local commercial brokers who have experience in that market would be the best ones to talk to.  Find one that is a member of the International Council of Shopping Centers, whom all of those national tenants are a part of and are in the database.  I have experience with this in my market in DFW, TX and I'm available for DM if you would like some guidance from afar.