Thoughts on converting an industrial warehouse for NNN tenant?
I know industrial is a hot asset now but, I’m looking to find underutilized warehouses in the northeast and then bring in an investment grade NNN tenant like a pharmacy, supermarket or (ideally) amazon. 

Is this a feasible plan in the current market? What are some of the best resources to find these types of deals? Would a tenant sign a pre-lease agreement? Does anyone know how the build out process works - is it just free rent for 6 months? 

I am generally looking to buy something vacant in the sub $5m.
[{"id": "hmaebxc", "text": "I'm thinking some posts need to have a $ sign added to them, mandating that any person reading them gets paid to do so.", "replies": [{"id": "hmafs3a", "text": "Sounds like crowdsourced consulting lol", "replies": [], "depth": 2}], "depth": 1}, {"id": "hmajyqw", "text": "Ok I'll bite. \n\n\"Is this a feasible plan in the current market?\"\n\nNo. \n\nI suppose there is a small possibility of finding an old warehouse in a high-density city that is suitable for up-zoning to retail, that has the traffic/demographics to support it, and that is priced so that you can capture the value as opposed to the seller pricing it in as if the conversion is already done.\n\nIf you identify said building, now what? You either need a broker, development partner, or legal team that has previous relationships with the tenants you seek. There are whole firms built solely around catering to this market (Whole Foods for example). You would need someone with that experience to bring in the tenant, understand what is typical in these deals, and also to protect yourself. \n\nFor example, I know of a developer that ended up on the hook for all the TI's and their tenant walked when construction was delayed, entitlements expired and city didn't want to re-approve on the same terms despite the built out nearing completion. Sounds crazy, but especially in a building conversion, they're not simple deals.\n\nSo, no is the answer.", "replies": [{"id": "hmaozfv", "text": "Many NNN tenants actually specify their requirements publicly, including lot size requirements, square footage, parking spaces, etc. \n\nThe last point about being on the hook is very interesting. Can that be counteracted (protecting the owner) by hiring a legal team with experience with large tenants?", "replies": [{"id": "hmaqs5b", "text": "Yes- my point was that you'd need an experienced team; it isn't as simple as six months of free rent etc like you asked.\n\nYou could create a spreadsheet of publicized NNN requirements and grind out finding a match. Personally I think the odds of success are low, but I wish you the best.", "replies": [{"id": "hmc5n74", "text": "(He's looking to purchase a warehouse for less than 5 million U.S. Dollars {in the U.S.}, with the hope of acquiring Amazon as a tenant....even in Bessemer Alabama, where you can buy a livable house for 100 grand, that will only get you 25,000 sf.  It's a gut feel but, I'm thinking 500,000 sf is their minimum standard today and likely pushing 1,000,000 sf).", "replies": [{"id": "hmcktlk", "text": "Hey man, didn\u2019t know mentioning amazon would create such a buzz here (they are just one example, perhaps the holy grail in terms of investment grade tenant but, thankfully not the only tenant that does NNN). Pharmaceutical (R&amp;D) companies, pharmacy tenants, supermarkets, etc. don\u2019t require such a large footprint so $5M is very doable. I\u2019m the northeast there are a good amount of spaces in the 20k Sf range for that budget. \n\nAlso for their last mile delivery, Amazon is typically in the 150-200k Sf in the northeast", "replies": [{"id": "hme53dj", "text": "&gt;Also for their last mile delivery, Amazon is typically in the 150-200k Sf in the northeast\n\nWhich, for clarity, if you got the dirt for free, all the site work for free, all the building materials for free, all the labor for free, all the permits for free, all the inspections for free.....5 million dollars wouldn't pay for the landscaping.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "hmckcop", "text": "Thank you for taking the time and providing feedback. I\u2019ve gone the spreadsheet route as many retail tenants have publicized requirements but was just wondering if there are better resources out there. Generally in the cre space, I think this route provides the highest upside and ROI but it may be more complex and risky as you mentioned.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hman0jd", "text": "Securing an investment grade tenant as someone with a one-off project and no experience in renovating a property like that?  No chance.  Tenants would pre-lease, but not with someone without a strong track record.  Also, they don't want to handle the build-out.", "replies": [], "depth": 1}, {"id": "hmaow57", "text": "Is the thesis okay? Sure, but the logistics are wayyyyy oversimplified. \n\nFinding a property, crafting an appropriate offer based on market comps + redevelopment estimates + timeline for permitting after you sink big $$ into having plans drawn. Finding a major tenant that\u2019s interested. Getting a signed lease ahead of purchasing the property. Finding an architect and developer. There\u2019s so much to be done here that hasn\u2019t been baked out and until you get further down that road there isn\u2019t much we can do to help.", "replies": [{"id": "hmbx0ur", "text": "Not to mention that a lot of the large tenants willing to sign long term nnn leases are not interested in an older, underutilized, industrial building. They would rather have something new built for them or find something that fits their immediate, modern parameters", "replies": [], "depth": 2}], "depth": 1}, {"id": "hmbjbea", "text": "This sounds like a great idea. Cater your efforts to companies who are doing very well within their online business (ecommerce). They'll need the warehouse space. You might want to reverse engineer it by finding your buyers first and then go locate what they want.\n\nYou need go direct to a mail service provider to identify vacant industrial spaces.", "replies": [], "depth": 1}, {"id": "hmbz6jt", "text": "There\u2019s no way to do this without building a specific business first. You need a lot of experience before they want to partner with you. \n\nI\u2019m a former leasing/purchase attorney for those tenants you listed and the vacant buildings you\u2019re buying for $5m will be 10% to get signed by a large tenant. If it\u2019s part of your business plan and you can find other tenants\u2014sure. If you\u2019re thinking you\u2019re the only player who would love to buy and lease to Amazon, you\u2019re kidding yourself. \n\nAnyway legal and TI can easily kill a deal. Amazon will always have lease termination terms even after they sign so.", "replies": [{"id": "hmcjvrr", "text": "Thank you, I didn\u2019t know including amazon would have such backlash\u2026 it was just an example. I\u2019ve spoken to CVS and Walgreens (who are interested in a few properties that we are looking at) so I\u2019m not sure why so many comments here make it sound impossible (amazon is a stretch, sure, but they\u2019re not the only investment grade tenant). \n\nIs it actually a partnership and not more so a landlord tenant relationship? In your experience, have the large tenants requested new buildings or renovations of retail/ warehouse facilities that can be modified for their use?", "replies": [], "depth": 2}], "depth": 1}, {"id": "hmgucae", "text": "You need a minimum of 450,000/sqft for Amazon, Target, Walmart, etc to be interested.  I just built them a HUB in PA.  The 450k is just the building, not including additional acreage.", "replies": [], "depth": 1}]