Office real estate research?
I'm working through a model and am being asked: if an Office building is fully leased and stabilized, what acquisition research/information would you want to conduct? I'm going with rent, sales, expense comps, region leasing rates and general due diligence. Anybody have anything to add or general thoughts?
General market characteristics such as net absorption and/or vacancy rates can help give an idea of how active the market is as well.
Other questions to consider... what type of market is the office in? What type of jobs dominate that market? Are there any one sector that is more prevalent than the other? How is the industry/sector doing and is your market expected to see growth in the sector? These can be quantified through location quotients and employment multipliers, but these are more macro market trends.
Other than the one's already mentioned:
*Tenant profiles -- if tenants in the market are all big users and your property is all small spaces... you're going to have future leasing issues.
Tenants in the market report -- find out from brokers who is looking for space and what their requirements are
Floorplates -- Look at the layout of the floors. It's quick to figure out if the building is configured well.
Who built and managed it previously -- institutional buyers and developers tend to take better care of their buildings and use higher quality materials
Amenities -- make sure your building is offering market amenity packages to tenants. You may need to add a gym or bike parking.
Parking -- because, well, people need a place to park.
General Reports -- Phase I, PCR, Seismic (if applicable), etc.
Look at the Vintage and the Code history -- if the building trades make sure you don't need to do any major fire life safety upgrades
these are just some quick thoughts on stuff you need to know prior to building a model
Credit-worthiness of existing rent roll. Also... how are lease expirations staggered? Do you have a lot of roll in a short time frame?
Any kind of ground lease is something to consider.
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