Strip Mall 101

[Waxman]

How does one best learn the strip mall business?

How does being landlord of commercial property differ from apartment buildings?

How important are tenant leases?

What % ROI would make you comfortable when running the actual numbers (gross receipts from tax returns - debt service figures, not projections) on a business like a strip mall?

Strip mall contains 2 chair hair salon w/3 unused tanning bed rooms, laundry mat, auto mechanic, and deli/mini market.

TIA/Waxman

 

[Buzzie8]

Waxman, I have a little bit of experience with laundromats and have a bunch of good info I will try to get over to you if you PM me. I also spent about a year with a very successful strip mall shopping center developer here in Pittsburgh. He had a very interesting low risk way of developing a bunch of these small strip malls. He would take a few properties (usually on hard corners) and get them all under a 180 day option. Most of these properties met very rigorous standards for demographics, speed limits, turning lanes, traffic counts etc.. He would then take them out to high end retail (banks, pharmacies, fast food, etc.) As soon as he would get land lease from the retail partner, he would close with the land owners and develop the property with most of the other tenants being a bonus on an already pretty good deal. Rule #1 for him in all cases, was to have a good anchor tenant before he spent any money.

 

[robert roman]

Small strip centers remain the most challenged shopping center type across all markets.

Like the self-service carwash segment, many developers followed permits not rooftops and got ahead of the path of development. Ergo, the market mostly sucks unless you happen to be located in an area like Pittsburgh – 10th healthiest retail market in U.S.

If you want to learn about the market and where it’s going, I suggest you search out Chainlinks Retail Advisor’s U.S. National Retail Report.

 

[rph9168]

I don't know what is going on in your area but in my area there are more strip malls and stores in them that are vacant than filled. Some were built and never had an occupant. I pass by one all the time that is probably five years old and had never opened.

 

[MEP001]

I always wonder how these small strip centers can be viable. It seems like they're building them like crazy around here, and they never get filled. Someone built one right next to the wash here, had to have cost a few million dollars, and every unit but one stayed empty for the first year. I would have thought you'd need tenants lined up waiting to lease before you could start construction. Even now five years later it's more than half empty. I wonder if it was built just for a tax write-off or for laundering money.

 

[cellardale@aol.com]

I have owned strip malls before also. Usually not the best tenants, and the hardest to get to fullfill the lease. Even if you sign a national chain as a client, bankrupty occurs and you are left with a empty building. The carwashes give more peace of mind.