Shopping Center investments have a certain amount of risk. It is imperitive to be able to analyze the critical aspects of a shopping center such as, current income vs current debt, know lease start/end dates, know if current rents are above or below market, and vacancy rate in the market. These are just a few examples of the types of figures that need to be analyzed when evaluating a shopping center for acquisition. But with this post I want to get beyond the numbers. What are some other important variables to take into consideration during a shopping center acquisition?
Location - It is one of the oldest yet truest phrases used in real estate. Location, Location, Location.
Access- How easy will it be for customers to reach your tenants. Is the property at a signalized intersection? If it is not, what is the speed limit on the road in front of the property? Will customers be able to turn right and left from the road to reach the shopping center?
Competition - It is important to know the competing centers in the area, who are the major tenants, what are their lease rates, how well is the property managed or maintained, and even how long has the property been owned by current owner.
Credit - How many tenants in the shopping center are credit tenants? National and publically held tenants theoretically are less risky than regional or mom and pop tenants. How will the current tenants weather a bad economy? It is a necessary question in light of the last three years.
These are just a few factors beyond the numbers to take into consideration when analyzing a potential shopping center acquisition. A knowlegeable and seasoned broker with experience in shopping center acquisitions and dispositions is an outstanding asset for buyers looking to acquire shopping centers. They should be able to help buyers with these factors as well as encyclopedic market knowledge to help paint a clear picture of the asset.
Again, my intention with this post is to highlight just a few factors beyond the numbers that should be considered while analyzing a shopping center for acquisition. I have given just a few examples(and did not expand fully on those), this is not a how to guide, but merely an avenue to highlight other variables of a shopping center with regards to analysis. If you have any questions please feel free to let me know.
