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I was approached by a retiring physician’s spouse regarding the sale, or lease, of their small medical office building. The office is quite old, and owned by 2 physicians. The realtor has not been able to sell it in 1 year, and I am assuming because of the limited advertising she did.
The office is in prime location in Arlington, Texas, less than 2 blocks from a major hospital; in fact the street is the same. Since the building is old, and dated, the cost to bring it up to today’s standards would not make sense for a buyer, and would probably look at it as a tear down.. I think the value is in the land, with its prime location.
Covered Area: 3200sq.ft
Asking Price: $750,000
Asking rent: $3000 ( they are now ready to rent it out too)
They want just the 1st and last month’s rent.I have not done research recently, but 5 years ago, the rent rate/sq.ft with maintenance for a NNN lease was $1.25/sq.ft.
Cost of commercial/office land on this street: I have yet to figure out.
How would such a small commercial property deal be structured?
Ayesha
The asking price is way too high for the condition it is in. That is why it has not sold. Plus property taxes in Arlington are the highest in all of Texas.
Typically, if there is a real estate agent involved, I avoid the deal. There’s usually not enough room in the deal for the agent to get paid and me to get paid too.
This does not sounds like a master lease opportunity because the offices need work. It could be a HBS opportunity if the price was right.
They are letting the Realtor go since she has not performed in 1 year.
You are right about property tax rate in Arlington; one would thing one is living in Highland Park for the city, and county to demand so much.I was thinking of a Master Lease and letting tenants decide what they want to do – build out. The building was built in 1989.
Can we do a sliding scale lease with the owners, starting low to compensate for the money the new tenant will be putting in to update it?
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