The #1 Deal Killer in Commercial Real Estate (Not What You Think!)

  📍 This is one of the most overlooked factors when buying a commercial real estate, and this could cost you millions.

Hey everybody. Joseph Gozlan with Eureka Business Group. Your Retail Navigator for the Dallas-Fort Worth market, and today we’re gonna talk about one of the most overlooked factors when buying a commercial real estate, but one that can cost you millions if you don’t pay attention to it.

And that is parking. How many parking spots does that property have? And it sounds. Trivial. It sounds meaningless. It sounds crazy, but it is super, super critical. Specifically in retail, every city has zoning codes and has regulations around how many parking spots per use you’re gonna have to have in order to get a certificate of occupancy.

Every business owner that’s going to occupy your space is gonna have to go to the city, ask for a permit, ask for a certificate of occupancy, and that is gonna depend on what they do. What are the requirements? For example, if they wanna put an event center and put 300 people in that space, they’re probably gonna have to talk to the fire department,

make sure that there are exit signs. Make sure that there are safety doors. Make sure there is fire sprinkler system and so on. So every business is gonna have different requirements. The number one deal killing factor I’ve seen working with cities all over the metroplex is parking spots. How many parking spots are available on the property, and what are the different businesses that are already counted for? When I say accounted for, I mean that they look at your entire shopping center or retail strip or industrial flex or office building on medical.

It doesn’t matter. They have this matrix in their city ordinance for every asset class, for every usage. And they’re gonna say, okay, if you have a restaurant, I want 2 parking spots for every 1,000 SF. If you have a shoe store or any regular retail, I want 1 parking spots for every 1,000 SF.

If you are a mechanic or you’re an auto repair, I want two parking spots for every bay. So the regulations are different from city to city. They’re different from asset class to asset class, and they’re different from use to use. The most expensive use usually is restaurants and retail, and that means you have to account for about a parking spot for every 200 square feet.

That’s pretty much the ratio that I’ve seen. Going across the board in most cities, some of them are a little bit higher, some of them are a little bit lower, but those use and those numbers are pretty critical. So if the shopping center you’re buying. It was built in the eighties and doesn’t have that many parking spots.

This could lead in the future into situations where you wanna bring in a new tenant. They want to get a CO, but your parking spots are already accounted for by the city, and the city will just deny the certificate of occupancy due to lack of parking.

What do I do if I already own the shopping center and the city tells me I don’t have enough parking spots for the next tenant? That’s another video for another time. Look up on our YouTube channel.

You’re probably gonna find it over there.

I’m Joseph Gozlan, Your Retail Navigator for the Dallas Fort Worth market.

If you’re interested in investing in commercial real estate or need help managing your commercial real estate in the Dallas Fort Worth market, give us a shout. Leave us a note in the comments below. We’ll be happy to work with you.