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| Things to Consider Before Leasing
or Buying |
- Improvement allowances -- what the landlord
budgets for carpeting, tile, bathrooms, etc.; additions
to basic leased area. This allowance is sometimes called
"T.I." (tenant improvements).
- Location -- traffic counts, ease of access
to store, convenience to shoppers.
- Cost of occupancy -- expense pass-through,
improvements, insurance, etc.
- Overall draw of customers to center
-- does center have a steady stream of shoppers?
- Demographics -- are goods or services
attractive to people in the trade area?
- Effectiveness of management -- does
the landlord respond to complaints or suggestions?
- Parking availability -- is there adequate
parking for customers?
| Primary Concerns for Buyers |
- Physical condition of property -- price
should be adjusted to reflect the condition of physical
plant.
- Net income generated by leases -- what
is left after expenses of operation are paid?
- Occupancy level and tenant mix -- are
there vacant ("dark") spaces; are tenants attracting
shoppers?
- Stability of tenants -- turnover rate;
how long have tenants occupied the center?
- Upside potential in income -- are rents
under market; do leases escalate to keep pace with inflation?
- Protection from large increases in operating
expenses -- tenants share in expense increases;
physical condition of center is good without deferred maintenance.
- Area growth patterns -- is area gaining
or losing population? Will new competition emerge?
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