Today’s topic is about commercial real estate leasing. This will be a breakdown of what you should think about, and the things to avoid.
The first thing that most people misunderstand is the difference between a commercial lease and a purchase agreement. In a purchase agreement, you are interested in the price and maybe some conditions that the closing is subject to. However, in a lease, you might have 30 significant business points that you’re addressing that are above and beyond price. They are all critical, however, they all vary in the material to the transaction and take quite a bit of time to work through.
In addition to that, most people think that when you are leasing a property, it’s almost make-believe. Why? Because you are talking about a range from somewhere around $10 – $25 per square foot. However, your average space in a B-market is around 3,000 square feet at $22 square foot for retail, all-in. When you do the math, and you sign a 5-year term, which is pretty common, with 3% increases annually, you are looking at somewhere in the neighborhood of $330,000 over that 5-year term.
So if you are not paying attention, what you are really doing is signing a contract for a sum of money that you would probably never pay cash for today. You need to understand the risk that you are taking on because you are dead to paying this until the end of the contract. Most tenants are religious about their space, so they are very in-tune to the renewal terms because they don’t want to be there for 5 years.
If their business is successful, they are going to be there for 10 years. So now we’re not talking about 330,000, we are talking about 660,000. Let’s round up and call it 700,000, plus whatever improvements you’re going to spend in that space. You’re looking at close to a million dollars for a 3000-square-foot space. So, taking a little bit of time upfront to do some planning, to do it right, makes all the sense in the world.
Principal, Midwest Realty Group
Brokerage – Property Management – Construction – Development
A lot has changed in commercial real estate in the last 20 years and Midwest Realty Group has been through it all!
With great food, incredible beer, and amazing people, this awesome video from Discover Kalamazoo embodies all of the things that we love about calling Kalamazoo our home! Midwest Realty Group was founded over 18 years ago and has been doing business in the Greater Kalamazoo area ever since. Many of our team members were born and raised here and our principal broker, Rick DeKam has been practicing real estate in Kalamazoo for longer than some of our team members have been alive!
Thank you Kalamazoo!
Midwest Realty Group (MRG) purchased what is now referred to as “Sprinkle Plaza” in March of 2016, with a full property redevelopment planned for 2016/2017. With nearly 20,000 cars traveling down Sprinkle Road every day and upward of 14,500 daytime employees working within two miles of the center, we knew that this center had great untapped potential. At the time of the purchase, Sprinkle Plaza had only two existing tenants within the eight suite building. We knew that the redevelopment of the plaza would be critical to the leasing of the remaining vacant suites.
With new redevelopment plans in hand, the Midwest Realty team set out to market the center. The plans included a full renovation of the building’s facade; a complete landscaping upgrade; new tenant signage to increase visibility; and the addition of two endcap drive-thru suites.
Construction on the center started in September of 2016 and is expected to be completed by June 2017. We are currently working to secure tenants for the remaining suites and are excited about the amount of activity we’ve had considering construction isn’t completed.
There was a tremendous amount of landscaping work that needed to be done on the center, as well as deferred maintenance that needed to be addressed. You can see in the photos below that the landscaping was very overgrown and affected visibility to the center and it’s signage.
Along with the planned full facade renovation, we will also be upgrading the monument signage to match the new modern feel of the building. You can see the current monument sign and the planned upgraded sign below.
Our property management team was given the “impossible” task of delivering Jersey Giant Sub’s suite in just 3 weeks. Even though most sub-contractors were 8 to 12 weeks out, if available at all, the Midwest Realty team was able to prepare the suite in just over 3 weeks, making Jersey Giant our first new tenant to move into the Plaza. You can see a few progress photos of the build-out below.
With fall coming at us quickly, we jumped on the landscaping work first so that our plantings could take root before winter. After a lot of hard work and a little bit of fun, the center is starting to show signs of the high standard to which Midwest Realty Group holds all of our properties.
If you have any questions about the project or are interested in how Midwest Realty Group can assist you in improving the quality of your property, please contact us at 269-323-0717.
We look forward to continuing to update you on this project and others like it.
To stay up to date on the Sprinkle Road Plaza project, and to hear more about our future projects, follow the link and “Like” the Midwest Realty Group page.
We are excited to welcome Jersey Giant to their newest location within our new, Sprinkle Plaza redevelopment, located at 5965 S. Sprinkle Road. This is the fifth Jersey Giant to open in the Greater Kalamazoo area, with the others located on Westnedge Avenue, Portage Road, Oakland Drive, and Columbia Avenue in Battle Creek.
Jersey Giant has been a popular destination among sandwich enthusiast since their first store opened in 1979 in East Lansing, Michigan. Almost 4 decades later, there are 20 Jersey Giants across the state of Michigan and we are happy that Kalamazoo is one of the cities that they call home.
With their large selection of fresh-cut meats including, ham, capicola, prostini, salami, pepperoni, turkey and roast beef; sliced in-house, as your sub is being prepared, you can be certain that every ounce of goodness packed between our locally baked bread is fresh and delicious.
With the opening of their Sprinkle Plaza location, this is the third Jersey Giant that is operating in centers owned and managed by Midwest Realty Group.
Stop into Jersey Giant today for the best sandwich in Kalamazoo (our opinion!). T.J. recommends the Jersey Devil!