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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (21067)	5/28/2004 1:44:18 AM
From: X Y Zebra	Respond to of 306849

no, no, no... 50 % occupancy with only a few months of history... that gives them a trend... meaning within months it will be all leased up or at least better than 90 % that theory that you must have 70% to 100% leased up BEFORE you build is rather unrealistic, yes, it depends on the building... a single tenant not only is preferred but more like required... or a 4 unit industrial building... but on a multi-tenant industrial.... MANY if not all of the prospective lessees, will ONLY sign when they HAVE to move out of where they are , and THEN, only THEN they go start looking and will lease what it is already built... they can kick the tires (and more importantly, SEE the space).... I do not mean that the building SITS or years with a 50 % vacancy.. of course not.... I meant 50 % leased up as a NEW building (6 to 12 months -and in some markets 18 months....) For an investor that DOES NOT want to go through the PAIN of dealing with BURRO-crats who have no idea or concept of the time value of money... then bids... zonning boards, architects (-lol), then the actual construction period itself... rain.... mud... etc etc... they follow the project and yes, they do pay a profit, because they are not willing to take the risk and exposure that something may go wrong during the construction period and hae to foot the bill of a possible delay... They determine that the 'trend' is positive, (i.e. 50 % leased up relatively soon).... then a negotiated 'guaranteed return' (cap rate) for a year o so... and a fial sale is agreed upon.... They have cash flow the day they close escrow.... and yes... the location factor is all determinant... btw... you are talking about a riskier real estate... choping malls ... i like unglamorous animals... multi-tenant industrial parks... most people see ugly ducks in them... I see cash cows... -lol mooooooooooooooooooooooooo