Finance for Real Estate Development by Long Charles

Author:Long, Charles [Long, Charles]
Language: eng
Format: epub
Publisher: Independent Publishers Group
Published: 2011-04-25T00:00:00+00:00

TENANT STRENGTH

Commercial real estate property value rests on the financial strength of the tenants. For office, industrial, and retail, some tenants categorized as “credit tenants” are viewed as creating a highly reliable rent stream, as the basis of project value. The synergy of tenant mix in a retail project is also important in creating customer traffic for a center.

A tenant such as Whole Foods Market, Trader Joe’s, or even Starbucks adds value to a retail or mixed-use project by generating traffic. A tenant such as Microsoft or GE would be a solid credit tenant for an office property, and Walmart would be a prime credit tenant for an industrial property. Tenants such as these negotiate for lower rents because they understand the value they bring.

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