Deal Metrics

Buyers are scrutinizing small commercial prpoerties, weighing the pros and cons of single-tenant NNN (net net net) leases vrsus mixed-use investments. The math behind the deal is crucial, with cap rates ranging from 5.5% to 7.2% for NNN properties. For instance, a $1.2 million single-tenannt NNN property with a 6.0% cap rate and $72,000 in annual rent would yield a $72,000 net operating income (NOI). In contrast, a mixed-use property with a 6.5% cap rate and $90,000 in annual rent might be more attractive, but also comes with higher management complexity and potential vacancy risks. Buyers walk away when the nummbers don't add up, such as when the purchase price exceesd $1.5 million for a property with limited upside potential or when the cap rate dips below 5.0%. Ultimately, it's about finding the right balance between risk and return, with a keen eye on the financials and a deep understanding of the local market.