Buying one unit in a stripmall / shopping plaza

[Tom Ac]

We are currently renting a space in a strip mall and the landlord is willing to sell the unit to us. How does the process work? Do I need to get a commercial real estate agent or do I need an attorney to look over the transaction?   

Very much appreciate any inputs. 

[Jace Perry]

Hi Tom, I purchase retail centers as well. 

1. Commercial purchasing can be straightforward but complex. I recommend bringing in an experienced partner or finding a seasoned commercial agent familiar with that area.

2. You do not need a CRE agent to purchase it. You can do it yourself mostly with a good real estate attorney drafting up the PSA agreement.

Feel free to ask more questions and best of luck!

[Michael K Gallagher]

@Tom Ac. To second what @Jace Perry mentioned, things can be straightforward but complex.  especially if you are essentially buying what amounts to a condo unit of a retail space if I understand you correctly.

you for sure what to get a good RE attorney on your side to draft the PSA and help you through the transaction.  No real need for the broker if you already have located the space.  

Questions I'd have if I were in your shoes would be based around how the CAM expenses, management, taxes etc are going to work. These are usually pass throughs from the LL as part of the NNN expenses.

If you outgrow the space and need to lease it out what uses would consider the space?  is there a use that can backfill what you currently use it for and utilize most of the buildout.  if not you'll want to forecast in some TIA that you may have to pay to a future tenant to outfit the space for their use.  

Out of curiosity what makes you feel the purchasing of your unit rather than continuing to lease is beneficial to you?  

[Evan Polaski]

@Tom Ac, the process is very similar, in many ways, to buying a home.  Or in this case, you are buying a condo.  I would talk with a good real estate attorney.  I don't know you need a commercial broker to help represent you, but also may not hurt.  Just know, typically, in commercial transactions, the seller is not likely to be open to footing the bill for your broker.

Things I would be curious about:
Why is the landlord creating and selling off, effectively, retail condos?  I am not as connected to the retail world as I once was, but this sounds very out of the ordinary.  As such, I would be a little concerned about who will be your buyer if/when you outgrow your space or decide to move locations.

Who is running the owner association?  What happens when the roof starts leaking, the parking lot needs restriped, or the fire system for the center needs a major repair?

What type of deed restrictions are going to be placed on each sale?  I.e. I would assume you have an exclusive use clause for whatever type of business you are, but when the units go to condos with no singular landlord to manage those, what happens when two doors down sells and the buyer is the same use as you?  Alternatively, if you and everyone else has a limited use clause, while that protects you while you are operating your business, it could very well limit your ability to sell you unit.

[Joel Owens]

In a retail condo unless you have majority ownership you are not often the controlling declarant.

You need to look at restrictions that might run with the deed, any REA association, etc.

There is a ton of analysis that would go into if you wanted to buy or not the space you are in. You might not want the business there long term and find a better spot and then can you rent it out and cash flow for what you are purchasing it today for?

You can be hit with lots of special assessments. Before considering buying the unit you likely want an inspection of A/C units, roof, parking lot and everything else and try to negotiate a price reduction or credit from seller at closing to repair or replace the items. You typically do not want the seller fixing as when they are selling they tend to (dope stuff up for cheap) and can't be found after closing. It can be better to often estimate repairs or replacements on the high end and get a credit so you can choose materials and quality used and potentially pocket any unused difference.   

[Darnell Lockett]

Hi @Tom Ac. I 2nd what @Jace Perry said. You don't need a CRE broker but you definitely want an attorney that specializes in CRE sales contracts or leasing law.....should you decide to go that route.

[Sohail Bas]

Hi Tom, a few items on your journey to possibly purchase the building.
-negotiate if you can and always remember this may be the most important step
-due diligence, make sure zoning regulations don't cause you any problems in the future
-purchase agreement - this outlines the terms of the sale, make sure you have a lawyer review this
-financing - if they are owner financing that is great, if not try to have this secured before signing a contract
-closing - commercial property closing is much simpler and has less documents than a residential closing

Hope this helps.