Need help figuring expenses for a class project for a multi story commercial building
We are trying to figure out expenses for a multi level food court type property. The initial lot is $4.5m, we determined ~$20m for renovation for a four story building housing 20 individual restaurants. How much should we charge for rent? Can provide more details if needed.
[{"id": "it3rxpl", "text": "Assuming you want to model strong occupancy metrics, then you\u2019re going to have to make it mostly on a % rent basis with a small fixed rent portion to help cover expenses. Restaurants generally can\u2019t carry that kind of rent overhead and be successful. So start with what you think is a reasonable pro forma for a restaurant there, and then back into your rents from there. \n\nI can\u2019t imagine the logistics of 20 food services stacked on top of each other. Those grease traps\u2026ugh.", "replies": [], "depth": 1}, {"id": "it4b89m", "text": "A ground up multi-level food court?   Are you making ghost kitchens?  Have you identified comparable properties?\n\nYou said you are buying a $4.5m lot and then mentioned renovation.  How many square feet is the building and how many is the lot?  Are you really renovating a building (then you wouldn't be buying a \"lot\" you would be buying a building).\n\nI would think you might charge around $4,000/mo NNN per unit for rent, assuming it's pretty basic and you are in a suburban neighborhood but it's difficult to say.  Ultimately almost all expenses would be the responsibility for the Tenants in a typical retail deal.  LL would only cover the portion attributable to the vacant units.\n\nDoes Landlord provide and maintain the seating areas and tables?\n\nBreak down the expenses into a few categories and approach one by one\n\nProperty Tax - by far the largest item.  Figure out the property tax rate (most municipalities are about 1-1.25%) in your market and multiply it by your total all-in construction cost to determine the cost.\n\nAdd Maintenance costs\n\nAdd Property Insurance\n\nAdd a management fee \\~4%\n\nYou might add utilities if there are a lot of public spaces.  But traditionally tenant spaces are submetered so if there are no common areas then there wouldn't be much here.\n\nAre you going to have security?\n\nYou''ll probably have like 20k/yr in marketing expenses or similar for this type of space that tenants will not reimburse you for.", "replies": [{"id": "it4xqfm", "text": "Yes it is a ghost kitchen format. I don't think I phrased that well, we would buy a building on a lot already (2 acres), scrape the building, and rebuild from ground zero. The property would be in Plano, TX. No dine in part, solely delivery based for our BMI.", "replies": [], "depth": 2}], "depth": 1}, {"id": "it4yhx5", "text": "So when your professor asks how you came to your numbers, you\u2019re going to say you got them from Reddit?", "replies": [], "depth": 1}]