💸 Tenant Guide
Landlord Tenant Risk
| Name | Tags | Financial Risk | Liability Risk | Occupancy Ratios [First Washington 2024] | Text |
|---|---|---|---|---|---|
| Traditional Grocery | Retail | 2.6% - 3.2% | |||
| Pharmacy | Retail | 2.9% - 5.3% | |||
| Specialty Grocery | Retail | 4.8% - 7.3% | |||
| Off Price | Retail | 4.9% - 6.6% | |||
| Liquor Store | Retail | 6.7% - 8.4% | |||
| Department Stores | Retail | 7.5% - 7.5% | |||
| Full Service Restaurant | Retail | 8.3% - 10.9% | |||
| Electronics | Retail | 8.5% - 10.6% | |||
| Coffee & Tea | Retail | 8.5% - 12.1% | |||
| QSR / Fast Casual | Retail | 9.2% - 12.3% | |||
| Medical Practitioner & Other Medical & Urgent Care | Retail | 9.3% - 12.4% | |||
| Home Furnishings | Retail | 9.5% - 12.2% | |||
| Home Improvement | Retail | 9.5% - 12.2% | |||
| Auto Parts | Retail | 9.8% - 14.4% | |||
| Gas Stations | Retail | 9.8% - 14.4% | |||
| Other | Retail | 9.8% - 14.4% | |||
| Pet Stores | Retail | 9.9% - 12.5% | |||
| Cosmetics | Retail | 10.4% - 13.3% | |||
| Apparel, Shoes, Accessories | Retail | 10.8% - 14.6% | |||
| Hobby, Arts & Crafts | Retail | 11.5% - 13.5% | |||
| Dollar Stores | Retail | 14.7% - 14.8% | |||
| Nail Salon | Retail | 14.9% - 23.5% | |||
| Sporting Goods | Retail | 15.3% - 15.9% | |||
| Med Spa | Retail | 15.4% - 18.6% | |||
| Hair Salons | Retail | 17.3% - 23.2% | |||
| Banks | Retail | 17.9% - 23.9% | |||
| Cellular Store | Retail | 17.9% - 23.9% | |||
| Child Care | Retail | 17.9% - 23.9% | |||
| Dry Cleaners | Retail | 17.9% - 23.9% | |||
| Mail Center | Retail | 17.9% - 23.9% | |||
| Professional Services | Retail | 17.9% - 23.9% | |||
| Other Personal Services | Retail | 17.9% - 23.9% | |||
| Small Format Fitness | Retail | 18.4% - 27.3% | |||
| Cryotherapy | Retail | 22.4% - 23.9% | |||
| Experiential | Retail | 25.6% - 28.9% | |||
| Contractor | Flex | Low | Low | Cause they make good money. Also don’t complain. | |
| Restaurants | Retail | Med | Low | Typically the best. Always demand for that building. | |
| Hookah Lounges | High | High | |||
| Sweepstake arcades | High | High | |||
| Bars | Retail | Med | High | ||
| Dentist Office | Flex | Low | Low | ||
| Restaurant | Med | Med | |||
| Clothing | Retail | High | High | ||
| Military or Government Office | Flex | Very Low | Low | Wants you to turn key the space, does none of the contracting work. Very little negotiating with the GSA form | |
| Phone Stores | Flex | Med | Low | Corporate good, a lot of them franchises. Boost and Cricket are risky | |
| Window washer | |||||
| ChikFilA | Retail | Very Low | Low | Will often demand early exit clauses. Ground lease typically. | |
| Starbucks | Retail | Very Low | Low | - Early Exit Clauses; - Flat rent leases | |
| Large Format Fitness | Retail |
💡 If you’re looking for national NNN tenants and their numbers, this website is great. https://netleaseadvisor.com/tenant/davita/
By Asset Class
Non credit worthy client?
- Push back on up front expenditures such as TI and remodels
- Blame your lender requirements
Retail
Small in-line vs Big Box Anchor vs Shadow Anchor (someone else owns big box)
Target low price per foot or rent in place is less than the market is bearing with short leases, some amount of vacancy (25%+)
Service Industry is more stable than goods
Retail: parking, smaller suites better, visibility, traffic, decent population
High traffic: over 20k cars a day (depends on the market)
Shortest lease is 3 years
Tenant Improvements (TI)
- Ask how much TI is required to open and consider splitting costs in half.
Franchises
- Avoid signing a 10-year lease with a first-time franchisee. Opt for a 5-year lease with renewal options instead.
- Lower commission rates (3% for year 1, 1.5% for year 2).
- Franchise Leases: Review franchise riders carefully and consult an attorney who recently handled a similar lease.
Due Diligence on Tenants
- Check they have the proper Business insurance
Avoid businesses with bad customers
- smoke shops, hookah
- middle of the night traffic
- bars that are still open in the middle of the night
Industrial
Office/Industrial/warehouse: same, but frontage matters less. Both are ideal, but not required