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| Retail Tips
Sometimes finding the right location is the
hardest task to accomplish. Luckily, Prudential Commercial Real
Estate offers access to view unlimited aerial locations to better
suit buyer and seller needs. The link below will help:
Retail properties can range from a single,
one-tenant building to over a million square feet of assorted shops
that display goods or sell services to the public. Explore the three
types of retail properties and some tips about buying or leasing
these properties:
1. Shopping Centers -- A group
of stores catering to a trade area, which offers a variety of
goods and/or services and on-site parking (the tenant "mix"):
a. A "super regional center" has three or more major
department stores, is often enclosed (mall), is 750,000 to
one million square feet, and draws from a large trade area
of 12 miles or more.
b. A "regional center" has one or two department
stores, a variety of smaller stores, and is larger than
300,000 square feet. It will draw from an eight mile radius
or more.
c. A "community center" usually has a supermarket,
junior department store, and a variety store, is larger
than 100,000 square feet, and draws from a three to five
mile radius.
d. A "neighborhood center" is built around a supermarket
and/or drugstore, provides convenience goods and services
to a neighborhood, is between 30,000 - 100,000 square feet,
and draws from a one to three mile radius.
e. A "convenience center" is a small cluster of
stores along a street, 5,000 - 40,000 square feet; trade
area is immediate neighborhood. May have a convenience market,
laundromat, dry cleaner, etc.
f. A "specialty center" often has a theme, usually
has no anchor tenant, and generally is local in impact.
Examples might be home improvement centers, gift shops,
or auto service and sales.
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2. Free Standing Store -- One commercial
building meant to be occupied by a single user. It is typically
found near major shopping centers on major routes, and fills
a specific need in the area.
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3. Strip Commercial -- A string of
stores in a commercial area with no central leasing, management,
or theme.
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4. Things to consider before committing
to lease or buy a Retail property:
- 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?
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5. As a buyer of retail properties,
primary concerns should be:
- 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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6. Once you decide to sell or lease office space, a
Commercial Services specialist will assist you every step of the
way.
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Office Tips
Office
buildings range from small, owner-occupied properties to multi-building
office parks. Office suites may also be an important portion
of "mixed-use" developments, both in new construction
or historic rehabilitation properties. Consider carefully what
type space would be most suitable to your business. If you make
a mistake, you could end up paying too much for a lot of years.
Consider what "class" of office property is most
appropriate for you.
Class
"A" Property:
Building has excellent location and access to attract the highest
quality tenants. Building must be superior construction and
finish, relatively new or competitive with new buildings, and
providing professional on-site management.
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Class "B": Property:
Building, with good location, management, and construction land
tenancy. Can compete with low end of Class A.
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Class "C": Property:
Generally an older building with growing functional land or
economic obsolescence. Typically, a higher price per square
foot will be paid for "Class A" property than "Class
C".
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Class "D"
Property:
Older building in need of extensive renovation as a result of
functional obsolescence or deterioraton. Use our handy Office
Property Checklist to help you evaluate office space.
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