15 Questions & Answers for Net Lease Development: A Comprehensive Guide

Retail Net Lease Development Services - N3 Real Estate

The professionals at N3 Real Estate specialize in a wide range of commercial real estate services, including, but not limited to retail net lease development, asset and property management, project leasing and marketing, and tenant representation. Our CRE experts put together a running list of the specific categories for retail net lease development and important questions to ask when considering the implementation of net lease development services for your company. This is a process that takes time, and it should be done diligently to ensure that all of the bases are covered.

The main elements of net lease development include:

1) Retail Site Selection
2) Documentation
3) Financing
4) Breaking Ground / Retail Development
5) Certificate of Occupancy

We’ll help you go through all of the steps and from start to finish. Below you’ll find all of the questions and answers to guide you through the net lease development process.

Retail Net Lease Development: Site Selection

1) What factors are considered when selecting an ideal retail location?

Retail centers, brick-and-mortar shops, and restaurants are best placed in areas with high residential or commercial density. Synergy with other retailers and restaurants in the area provides great energy and visibility to your business. Other important factors to keep in mind are having easy access and ample parking.

You can get a general feel for how many people go by a particular location by scouting the area, but there are quantifiable factors involved here that can be provided as statistics. Knowing this information in a numerical form will allow for better comparison and contrast when considering multiple locations for your retail space.

2) What is site selection research?

Site selection research is the process of looking at a specific property and looking at the different statistics that could impact the potential success of a business in the area such as traffic flows, demographics, affordability, configuration, city restrictions and requirements, and competition.

3) What are the demographic assessments involved?

We start by reviewing the population metrics with demographic assessments, specifically looking at statistics such as population growth / projections, median household income, level of education, information on the school district, employment rates, homeownership, vehicles per household etc.

4) What about market analysis and feasibility studies for retail locations?

We also study the traffic flow, mobility (cellular) data to see where people who come to the intersection or shopping center live and work. Furthermore, we evaluate the energy and sales volumes of the retailers and restaurants already there, and ensure that the access, visibility and parking are conducive to attracting consumers to your business.

5) What is the importance of retail site selection?

It is extremely important to select the right real estate.  No matter how strong the brand, putting a location off the beaten track or in a poor quality real estate location will result in sub-par financial performance. It is generally better to pay more to be in the right location than to pay less for a mediocre location. Keep in mind that these are long-term investments. A healthy sales level based on great real estate will pay dividends for years and years.

6) What major issues should be considered when determining a retail site location?

As mentioned above, the accumulation of all of the demographic and economic statistics in the area help give a better idea of the potential success for a business in a specific property / area. It is not so much that there are more important issues than others, but rather that it is important to consider the aggregate of all of the data collected. There aren’t any retail properties that are perfect, per se, but there are certainly properties that have more potential than others when looking at the bigger picture.

Net Lease Retail Development Services - N3 Real Estate
Pictured Above: Net Lease Development & Retail Site Location Research for N3 Real Estate’s Project in Denison, TX

Net Lease Development Documentation

7) What documentation is needed for retail net lease development?

The major documentation/red tape challenges for developing retail properties stem from government approvals. In most jurisdictions a retailer (or their developer) will need to secure the proper zoning for their use, go through a site plan approval process at the city, secure access to roadways through a state approval process, secure city approval on construction drawings and building design, and get utility designs created, approved and installed by each utility provider such as the water, electric and gas companies.

8) What about site plans / development plans / building plans?

The site plans should include the following details: property lines, existing and proposed conditions, utility locations and sizes, easements, construction limits, parking information, surrounding streets, height restrictions, and ground sign locations. Any proposed changes to these plans would need to be approved prior to engaging in construction or development updates to the property.

Net Lease Development Financing

9) How do you finance net least development for a property?

Most developers use a combination of their own funds, funds raised from outside investors, and construction loans from local banks that they have built relationships with over time. N3 has its own investment capital which allows us to fund a high-volume of development for our clients.

10) What about arranging construction financing / loans for net lease development?

A developer’s experience level, reputation for successful developments, and history of meeting payment and completion obligations on prior loans are important factors in securing new loans.  In addition, the developer will generally need to have the executed lease, project budget, site plan, construction drawings, entitlements and permits in hand before a construction lender will fund their loan.

Breaking Ground / Retail Net Lease Development

11) Does N3 provide various options for retail development?

Yes, we perform full service build-to-suit development across the United States. We buy the land, build the building, and lease it to the retailer.

We also perform fee development for retailers, i.e.: they buy the land and pay for the building but we perform the diligence and construction for them. We leave it to each retailer to determine the right structure for their financial position.

12) Does N3 help with permitting?

We will also manage the process of getting the right permits for the proposed development. This way you can focus on the core business activities that will ultimately impact the success of your business in the long run.

13) What are the different types of infrastructure improvements?

There are several types of infrastructure improvements that are required for a retail development including: communications, power / energy, water, storm water management and waste management.

Net Lease Development: Certificate of Occupancy

14) What is the meaning of occupancy certificate?

The certificate of occupancy, or CO, is given by the city to indicate that the space is complete, meets code, and is safe to occupy.

15) How long does it take to get an occupancy certificate?

It takes approximately 2 – 5 business days to get the certificate once the space is complete and ready for inspection.


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