Buying a property inside of an outdoor plaza? What to be aware of?
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[{"id": "gwz4lp1", "text": "I'd call it a modified condo, maybe separated townhome structure. There are a lot of uncontrollable items that you will encounter with a property like this. Does everyone play nice in the sandbox (does everyone actually pitch in for CAM, who procures the contracts for CAM vendors etc.) . The other issue I can foresee without setting eyes on the property is the reduced optionality of being in a modified condo type environment (i.e. renovating, redeveloping etc.)", "replies": [], "depth": 1}, {"id": "gwz5z3p", "text": "This would be like a single family house with an HOA. There's almost certainly going to be some sort of deed restrictions saying you have to be part of the property owners association (or whatever they call it), pay dues etc. Will parking be enough for you? Make sure the parking is truly communal and you're not going to get your customer's cars towed. That price is pretty insane unless we're talking a major major city", "replies": [], "depth": 1}, {"id": "gwz7qex", "text": "I\u2019m not trying to rain on your parade here, but think this through...\n\nYou\u2019re in a market that is white hot. Basically, we\u2019re in the roller coaster car, and we know we\u2019re not the front car, but we also aren\u2019t the back car. And it feels like the top of the hill is either right in front of us, or maybe right under us. When we finally get that last car over, it\u2019s going to be a fast descent and we won\u2019t know where the bottom will be. We\u2019re going to fall precipitously.  \n\nWe\u2019re doing a lot of the same gyrations that happened in 2007. Everyone is partying like it\u2019s 1999 and the world might end when the clock strikes midnight.\n\nMarket fundamentals don\u2019t make sense right now. The seller is seeking a million dollars in increase in value. What has changed from a year ago? Did Mr. Seller steal it and they just happen to come across the craziest lift in values in the last 14 years? Did they make lots of improvements? Is there an oil well or gold mine that comes with it?\n\nYou\u2019re talking about a piece of real estate that is offered at $1,400 PER SQUARE FOOT. That\u2019s absurd in any market (unless said oil or gold or other precious substance is below it). Oh, and it\u2019s a commercial condo. Call it whatever you\u2019d like. It\u2019s still a commercial condo. \n\nPlease pause. Don\u2019t be a bag holder. Please. You will eliminate a tremendous amount of wealth by making a mistake like this. And the bank can call your note if the market turns negative dramatically. It\u2019s called technical default. \n\nJust think through what you\u2019re doing. Because the fundamentals of what you\u2019re talking about don\u2019t pencil out.", "replies": [{"id": "gwz9z15", "text": "What are you talking about.  OP said the property next door with a 2,400 square foot lot size sold for $450k, and his space which has a 10,000 square foot lot is listed for 1.4.   That's actually cheaper on a per foot lot size.  \n\nIt's impossible to say if it's a good deal or way overpriced without a bunch of research.  But in an outdoor plaza setting with a large lot alot of the value may come from the land and future development possibilities instead of just the 1000 square feet.", "replies": [{"id": "gwzai2m", "text": "I see my error on calculation. I read it wrong. Thank you for identifying that. \n\nThat said, I\u2019ll stand with my statement. I don\u2019t really need a lot of research. $1,400 per square foot is insane. The landscape of retail and office is changing at a feverish pace, unlike anything we\u2019ve ever seen. And it\u2019s going in the wrong direction.", "replies": [], "depth": 3}, {"id": "gwzajzr", "text": "By the way, your username is AWESOME!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gwzkszb", "text": "It sounds like a multi-tenant retail center (with individual owners). I sold a drive thru for $1,003/SF to a regional brand in Anaheim, CA. If you are not on the beach, $1,400/SF is a CRAZY amount to be spending (if the property is only 1,000 SF). \n\nWhat to look for - neighbors don't just \"chip in\" to maintain anything. There must be some type of CC&amp;R or association in place that has specific guidelines on the upkeep of the common areas. If not, good luck. Your idea of preventative maintenance versus 10 other people....if there isn't something in writing and there are no guidelines, this in a nightmare waiting to happen.", "replies": [], "depth": 1}, {"id": "gx03zln", "text": "It\u2019s like a CAM", "replies": [], "depth": 1}, {"id": "gx0p9xv", "text": "There's about 20 different setups this could be. All of which I would describe as very complicated for this property size.\n\nWith anything like this, be absolutely aware that your due diligence needs to be very very thorough. Title search is going to be critical. Talking with each neighbor is vital. Request a GL and discuss some recent history at the property with neighbors. Handshake agreements and unregistered agreements are common place in these situations.\n\nYou may want to ask yourself, is the juice worth the squeeze? How much risk is there, how much uncertainty, how many moving parts, and what am I getting out of it?", "replies": [], "depth": 1}, {"id": "gx1kqcn", "text": "Hi,\n\nCommercial broker from Toronto here. These are most likely just regular freehold commercial or mixed-use properties that are pretty common here. The owners come together and pitch in for snow removal / landscaping because it's cheaper than each organizing and paying for that stuff for themselves. The lot line typically goes to the street, and each owner owns parking spots that run along their property line front and back. Sometimes the owners are chill enough to agree that customers can use any available parking, first come first served, and sometimes you see those 'parking reserved' signs.\n\nThe  main problem with these is when the owner can't agree on maintenance, so for example,  there is that one guy who won't chip in to fix the asphalt or clear the snow etc. I hope you have a proper commercial broker representing you, since they should have explained this to you, but if you DM me the address I can look it up for you.", "replies": [], "depth": 1}, {"id": "gx4efsh", "text": "If you are buying this for a business that requires parking spaces for cars be aware that landlords are not very amicable to relinquishing parking stalls to individual tenants for a variety of reasons.\n\nSometimes they have contracts with lenders, other tenants or even the local government that stipulate they cannot designate a certain percentage of parking stalls to any one tenant or use any of the space for commercial purposes other than providing parking for consumers/shoppers to use the retail locations.\n\nBe careful with the CAM (common area maintenance) and how it\u2019s divided up. The principles should be the same for any \u201cretail center\u201d or \u201cshopping center\u201d but make sure you take a closer look at what exactly everyone \u201cchips\u201d into. This can get complicated. \n\nCheck to see if the utilities are separate for each building  (metered separately) or if they are combined and everyone splits it. If you split be careful there isn\u2019t one tenant overusing their power and making everyone else pay for it.\n\nThere are tons of other important details that are already mentioned like renovations, upkeep of the structure, permitted uses, but this post could get really long so I\u2019ll let others chime in.\n\nHave a seasoned commercial attorney take a look through your lease before you sign anything.\n\nEdit: oh - in Canada? The above applies mostly to the United States", "replies": [], "depth": 1}]