What does it actually cost to build a retail strip center that attracts strong credit tenants and what does it sell for?
Land: $100/SF of building footprint
Hard Costs: $240/SF (shell, sitework, tenant improvements, signage & power)
Soft Costs: ~$84/SF
(architecture, permits, leasing commissions, interest reserve, legal, title, insurance & developer fee)
Total All-In Cost: $430/SF
At completion/stabilization:
Avg NNN Rents: $43/SF
NOI yield on cost: ~10%
Sells for $740 /SF
$300 /SF spread between cost and value. On a 10,000 SF retail strip that's $3M in value creation.
Get the tenants right, and the math works.
Credit quality matters as much as construction