Retail Property Investments

Retail Property Investments

Retail commercial spaces - including strip malls, regional malls, and lifestyle centers - are a great option for local Ohio and out-of-state investors. There is a lot to consider, but Pri and the team at Perfect RealEstate Investments are here to give you unbeatable advice throughout your journey.

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Ultimately, our goal is to set you up for success with property investing, so keep reading to learn more about investing in retail commercial real estate, or if you’re ready to get started, feel free to contact us now.

Retail properties range from single-tenant buildings to small strip centers with no anchor, to large shopping malls with multiple anchors. Retail properties can also include outparcels, where a part of the land is designated for individual tenants such as fast-food chains, banks, or other standalone retailers.

Retail properties typically have long-lasting leases, typically over 5 years. The lease agreement with each tenant should be a Net lease (they pay all the upkeep, insurance and taxes etc.) That agreement can also be set up to allow an annual inflation adjustment.

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Strip/Convenience Centers

These are often self-managed and good for local Ohio investors. As in all commercial real estate investments, always look at Cash-on-Cash. There are usually several tenants, but it’s important to find a center with a good mix of different tenants and store types

The location, class and socioeconomic issues are major factors in analyzing the financial attractiveness of strip centers. Look for properties with “necessity-based tenants” - Grocery stores, pharmacies, auto parts stores, etc.

Community Centers

Newer centers with long-term leases are the most desirable. These can be self-managed by their owners but are normally professionally managed and are good for both local as well as distant/out-of-state investors.

Community centers are typically anchored by a big box retailer, discount store, supermarket or drug chain.
They range in size from 30,000 to 400,000 square feet. Their trading area – the primary geography from which they draw their customers - is from three to six miles.

Neighborhood centers are a smaller version of community centers (30,000 – 125,000 square feet) and represent approximately 30% retail properties classified as shopping centers. They are most often anchored by a grocery store and have a trade area of around three miles.

Single-Tenant Properties

Depending on how the lease is structured, this can be an excellent source of passive income. This is a good investment for just about anybody and we highly recommend it. Single tenant absolute net retail properties are extremely suitable for passive investors preferring no property management responsibilities.

There are no landlord/buyer responsibilities whether the asset is acquired as a fee simple (ownership of the land & building) or ground lease (ownership of the ground only).

Regional Malls

This enclosed property features inward-facing stores connected by a walkway. Common merchants include junior department stores, discount department stores, and fashion apparel stores.

While there have been major issues – many malls are rated at B- or lower, meaning that they are not necessarily going to last, there are several reasons to consider them as good investments:

Amazon and other online retailers have been heavily involved in acquiring malls and converting them into warehouses for quicker delivery
Repurposing – many mall properties have been converted to mixed-use – with spaces for everything from medical offices to “last mile” fulfillment where the last step in getting merchandise to local customers includes pickup and delivery service.
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