CRE Education, Importance of Financial Modeling, SIOR vs. CCIM (Office Hours)
Let's dive into whatever questions you have around commercial real estate brokerage, investments, etc.
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Key Takeaways:
Triple net leases are a good investment option for beginners due to lower risk.
It's important for leasing agents to understand commercial real estate valuation and underwriting to negotiate better deals.
Flex industrial spaces are a relatively lower risk investment opportunity currently.
Building a personal brand and commercial brokerage are good business models for earning income without large capital.
Micro-unit developments can lease up faster at lower risk than larger units.
About Your Host:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville.
Episode Transcript:
0:01
Welcome back to the commercial real estate investor, podcast, Tyler and Milwaukee in a hotel edition. This is for our office hours. So if you have any questions about commercial real estate, feel free to start joining me live at 8:30am Central Standard Time on Tuesdays. And we can dive into whatever questions that you have around commercial real estate, whether that's a specific deal that you're working on, that you'd like to get some advice on. Or if you just have general questions about a certain investment strategy, or a certain asset class are my thoughts on the market or where we're headed. This is what the office hours are for. So feel free to jump in and ask whatever questions you have around that. It's been a good week for me. So far, I was actually out in Palm Springs with my Entrepreneurs Organization forum, working on 2024 gold plating.
0:58
And really drilled out spent days preparing for that. And then even more time after that, taking feedback that I've gotten from my EO Forum, which is basically a board right, it's a board of advisors. And I can't wait to share those with y'all. I think I'm going to have to do a live stream here soon to walk you through my goals for 2024. From both my personal side, the development side, the brokerage side, to kind of show you how I'm looking at approaching commercial real estate moving forward, I think it'd be a fun conversation to dive into.
1:37
And it was great, we flew out to Palm Springs, it's always nice, but we'll do that once a year, where we kind of leave Nashville go out somewhere. And really just isolate ourselves and work on our goals. And
1:53
like I said, we were in Palm Springs, the weather was amazing. It was pretty nice. Then I flew into Chicago for a CCIE AM.
2:02
I guess class on negotiations yesterday, because I'm working on getting my
2:07
CCIE AM. designation, I've taken all the classes except for negotiation, which are just completed yesterday. And then I think I've got to take the online ethics course. But I'll be sitting to get my CCIE and pen this spring. So if you're planning on being out there, give me a shout. I'll be I don't know, I don't know if that's in Seattle, or if it's in Chicago,
2:32
where we'll be sitting for the exam, but it'll be good. Looking forward to that. And then took the train last night from Chicago to Milwaukee. I was originally gonna fly I didn't realize how close they were. And the train was almost the exact same distance from Chicago as the flight was. So we ended up just taking the train taking all Amtrak, which was pretty nice. I've never been able to do that. Because, of course, I'm from the south, and we don't believe in mass transit in the south, apparently. So it was fun. Getting to get out there and do that. But yeah, see, a few of y'all have joined live. If you have any questions on commercial real estate or anything specific that y'all would like to dive into? Let me know. We can we can jump right into that. But yeah, Chicago was good. I mean, it was, you know, a good a good class. I mean, I've been negotiating commercial real estate deals for 10 years. So it was a bit of a
3:30
I guess, refresher on negotiations. But you know, got me thinking while I was taking the class, like yeah, maybe I'm not necessarily learning anything new. But having it brought back to the forefront of your mind is always a good thing to do. So highly recommend taking classes like that. I love CCIE I am big fan of that. Let's see, Edwin is asking, Hey, Tyler is a triple net lease good for someone just jumping into commercial real estate. I highly recommend the triple net lease for anyone getting into real estate. Especially, you know, if you're if you're a beginner on the commercial side, because the triple net lease helps mitigate your risk from multiple aspects, right. So, you know, if you have a full service gross lease, of course, it's easier for tenants to understand, you're going to have to explain what triple net means because a lot of them will be like, Well, why am I paying base rent and additional rent. And of course, you can kind of pitch it as an all in one kind of deal. But, you know, if, for example, in Nashville, we don't get snow very often. When we do it's pretty bad and it's usually icy because it warms up enough for all of the snow to melt and then it freezes overnight. Again, that means that we have to go out and salt all the sidewalks parking lots, all of that kind of stuff on our property. Well, that's not usually in our annual budget for property management because
4:56
it doesn't happen very often. Right. So that's an additional issue.
5:00
expense that we're having to spend on yours when we do get snow and ice. Now in a full service, gross lease, which you know, you typically see with older industrial or office buildings, you as the landlord are 100% responsible for covering that cost. Whereas, if it's a triple net lease that cost sure you cover it on the front end, but you bill it back to the tenants, so they ended up paying for it, you don't have to worry about your property taxes going up, your insurance rates like multifamily is getting absolutely crushed right now. And in my opinion, it's just a lot easier to manage. Because you're not having to get too deep on to the management and bookkeeping side as an owner. Now, of course, you will have a property management team that will kind of be there in between you. But it's just a lot easier to work on. So yeah, absolutely. I would highly recommend the triple net lease for anyone looking to jump into commercial real estate.
5:53
Robert saying, Excuse me, Robert, saying, Hey, Tyler, I've been dabbling in residential one to six units for a while and saw your channel, listening to everything you have right now. lol, I appreciate that. Robert, hopefully, you're enjoying the content. I'm in Los Angeles, thoughts about the about commercial in SoCal. You know, I don't know specifically about SoCal compared to the rest of California. But California seems to me in a post pandemic world to be really struggling.
6:28
You know, one of my brokers, Phil Fletcher, he's a great guy who was with Avis and young for seven years in San Francisco. I know, that's the opposite side of the state. But you know, he moved to Nashville, with over a year ago, because the office market out there just gotten absolutely crushed. And after the office market got crushed, the retail market started to go, because people weren't traveling by the retail to go to their offices anymore. So
6:57
foot traffic and vehicle traffic just dropped dramatically. And a lot of these companies started closing down and relocating out of the area. And so they saw, like, an 80% Plus drop in the activity that they were working on. Now.
7:15
That is pretty hard to hear, as an investor, right? Because, you know, that's a significant drop, and a whole bunch of tenants moving out, which means that the valuation of your property is going to go down. There's no doubt about it. And that's, and hopefully in that case, you can even cover your debt service. A lot of these owners are not at that point. And, you know, I think it's I think it's a tough market right now and in California is losing a lot residence. You know, the, the environment doesn't seem too friendly for investors. But playing devil's advocate, if you're the investor that can figure it out, there might be a really good opportunity for you to be buying commercial real estate in California.
7:59
I think it's going to vary widely depending on the type of property you're buying, what kind of deal you're getting. But assuming you're buying, you know, maybe it's industrial, and you're getting a good deal on it, I don't see why it would be a big mistake. Now. I will say the majority of clients that we work with on the brokerage side, we work with investors from all over the country
8:24
that are in California, they want to invest anywhere, but California, right. Most of them we're placing into investments in Texas, Florida and Tennessee, because those are income tax free states, and a lot of those investors eventually see themselves moving to a state like that, just to protect their assets, right, they don't have to pay as much in income tax. So it makes a lot of sense for them to move to a state like that, especially if you're a high earning individual. So that is that's just some food for thought. I think SoCal could be a good investment. But I think it's really gonna depend on on what you're what you're buying out there.
9:02
Cole was saying, Hey, Tyler, which real estate financial modeling course do you recommend for someone who is a leasing broker? Looking to learn more about the analysis and valuation side of the business? Cool. I think that learning how to underwrite from the investor's perspective as a leasing agent, is a phenomenal idea. I mean, I think that underwriting,
9:23
underwriting is one of the best skills that you can possibly have in commercial real estate, no matter what sector you're in, because it helps you fully understand why people are making the decisions that they're making. And as a leasing agent, you know, let me let me take a step back. I hear all the time from business owners, like oh, that, you know, that space has been sitting vacant for a year, you know, maybe we can get a really good deal. You know, let's let's come in at you know, 50% of their asking rental rate.
9:53
And, you know, if you don't know about commercial real estate valuations and underwriting, you're like, Yeah, okay, that's probably a good
10:00
Ideal let's let's lowball them on the offer and see if they take it.
10:04
The problem is most of those landlords are willing to sit on that property vacant for years. And not what were their rental rates. Because if they lower the rental rate and sign a lease, it significantly devalues their property. So let's say that a landlord is asking $20, a foot triple net, and it drops, you know, in, you think you're going to offer them 10 bucks a foot, triple net, add on, let's just say it's 2000 square feet, right? So at 10 bucks a foot triple net on 2000 Square feet, that's $20,000 a year, let's say it's valued at a 6% cap rate,
10:41
that that lease is worth or adds $333,000 in value to the property.
10:49
If the landlord gets 20 bucks a foot net on that same 2000 square feet at a 6% cap rate
10:56
$666,000 in value.
11:01
Now, it would take years and years for the landlord to make up that value from the cash flow compared to the cap rate, right. So a lot of them are just willing to sit on it. So yes, as a leasing agent, if that's something that you can bring to the table, whether you're on the landlord side or the tenant side, it will help you understand where the landlord is coming from when you're working with them. And you could probably pitch it better to any tenants that are looking at the space, right? Like, hey, the landlord's not willing to devalue their property, it probably be a better idea for you to come in and ask for free read, or additional tenant improvements.
11:35
It'll also help you understand from the tenant representation side and pitch it to your client as well, if, you know, hey, look, here's how valuation works on the commercial real estate investment side. I think that we should take one of these, you know, two or three other paths
11:50
to see if we can get a better deal on this read.
11:56
Robert, saying I agree I figured out the residential side, I think there's chance to figure out commercial Absolutely, there is I mean, look, commercial real estate is not nearly as hard as a lot of people build it up to be. It's a great asset class. I think that I honestly, I think it's easier than residential in many aspects. I know that residential is easier and other ones, right? Like it's so much easier to just rent a house, right? Because there are so many prospects out there looking for that, and you just throw it up on Craigslist or apartment.com. And you're done.
12:25
The market hasn't always been like that, though, I think it will change at some point to where people are getting a little more desperate to find residential tenants. And, you know, you're you're kind of rolling the dice every time you sign a lease with a tenant on the residential side, in my opinion, because you can't do the background checks and secure yourself as much as you can in commercial real estate. The biggest difference is there's just not as much knowledge out there on commercial real estate. So
12:51
if you can learn the ins and outs on the commercial real estate side, I think it's so much easier.
12:59
Sorry, guys, my
13:01
throat is not working with me right now.
13:03
Neil is saying Have you ever looked into the SI por Society of industrial and office Realtors designation, I have done a few CCI M courses and plan to finish always looking for a different perspective.
13:15
Neil, I looked into si AOR when I first got started in commercial real estate. And it seemed to me like it was much which it is it's much more specialized. Right. It's more office and industrial.
13:29
And I at the time was doing a little bit of everything I was doing office retail, industrial hospitality, multifamily, whatever. And so I didn't, I decided to pursue CCI FM. First, because it has a much broader perspective, it doesn't matter which kind of asset class you're working on. And CCM all of the education will apply. But I do see some of the top commercial real estate brokers are si Rs. And usually they're also CCI M's, or at least working towards their CCI and designation as well. So I think it's a great idea to go for both, in my opinion, you can never have too much education in commercial real estate. And if nothing else, it's really good networking. So I would highly recommend Sr. I know a lot of incredible brokers that are so ours, and they love it, you know, they get a whole bunch out of it. And it's just a good networking opportunity as well. So I would definitely say go do that.
14:32
Cold saying rather than offering a low rental rate shoot for greater concessions to bring down the ner That's That's correct. Yeah. So like, if you think about it, if you want a
14:42
you know, 20% discount on your rent, you know, you're good, you're not gonna get that. But, you know, instead of trying to negotiate the rental rates,
14:53
I mean, this is assuming their market rates right. I mean, if it's well above market, then of course negotiate that because it doesn't make any sense.
15:00
But let's assume that the rental rates are at market rate.
15:04
I would go for some sort of free rent concession, some sort of tenant improvement concession, something that, you know, maybe limits your annual escalations, you know, there's there's different ways that you can kind of, I mean, that's the great thing about these deals, there are so many different levers that you can pull to make it work.
15:24
That there's no, there's not just one path forward.
15:29
Ramiro saying, Good morning, Tyler, do you have any suggestions when it comes to online classes or study material for a beginner commercial real estate investor? Thank you for your time.
15:38
Yeah, absolutely. I've got a ton. So first, I think I wrote a wrote a blog post on the top online commercial real estate courses. So if you just go to Google and type in, you know, best online commercial real estate courses, my website should be in the top five, there, I've got a list of all of the different courses that I liked the most, that are that are broken out by beginner, intermediate and advanced skill sets. They're broken out by price points, and the amount of time committed, right. So my course of course, is a part of that. But CCI M is also in there. And I've got a course from Cornell, and I think one from Columbia. And there's one that's like 17 bucks on Udemy or something like that. So there's a whole bunch of different price points, a bunch of different skill sets, kind of walk you through what all you could learn. So highly recommend checking that out. Of course, I've got a ton of free content on my channel, I think we're now well over 350 videos on here. So chances are pretty good. There's something
16:44
on the topic that you're looking to learn more about. And of course, we've got the podcast.
16:51
Trying to think through what else I mean, there's some really good books out there. I've also got a list of the top 10 books or best books for commercial real estate professionals that are pretty good. But kind of like what I was saying earlier, I like the CCI M classes. Going back what's the best underwriting class I mean, cci M 104, hands down the best underwriting class I've ever taken. Now, it is the most intense underwriting class, which is probably why it was the best ride. I mean, if you're going to take an underwriting class in 30 minutes, you're not going to really learn much CCI M 104 was a three or four day class from you know, 8:30am to five. So, I mean, it was it was intense, right? It's tough to find that amount of time to get away from your from your job. But
17:39
I,
17:41
I learned how to underwrite there. And now of course, my underwriting is far more advanced than what I learned from CCM. But in terms of like just beginner underwriting, man, it's phenomenal. I walked away, started underwriting a deal a day, and set started sending those deals out to my investors, I would just go find deals that were listed on loop net, or CoreXY. And underwrite them and send them out to investors and say, Hey, I think this checks your boxes, and I closed a $1.8 million at&t in Tennessee. Because of that, I mean, I probably put six hours of the work into it. And you can run the math on what a 3% commission on $1.8 million is, it was great. So highly recommend taking CCI and 104. I've got a bunch of videos on underwriting commercial real estate as well.
18:30
And then that's part of my course to go deep into underwriting because that's, that's the biggest thing I work on with my clients. It's like I said earlier, it's the best skill set that you can have. It's finding deals and knowing how to underwrite them, those are the two best skills you have. Because
18:47
if you don't have any money, and you're looking to get started in commercial real estate, you can always partner with somebody that has money, as long as you can find the deals and you can underwrite them and show them why it's a good deal.
18:59
I mean, that's how I got started, right? I mean, I started buying properties when I was 2526. I didn't have any cash saved up. I mean, you know, brokerage makes good money. But still, at that point, I'm just trying to make sure that I can, I can pay my expenses every month. And you know, bringing those two skills to the table was a game changer for me.
19:21
D is saying what type of commercial real estate has the lowest risk and highest reward? Well, D unfortunately, that scale is is typically
19:32
not in that manner. lowest risk typically means lowest reward, highest risk typically means highest reward. But in terms of you know, what's, let's go with a lower risk compared to a higher reward. Because because it's all going to depend on a deal by deal basis, right? I mean, I could say industrial but somebody you know, in Utah might find an apartment complex that they do.
20:00
Just get, you know, a 20% cap rate on.
20:03
So it all depends on the kinds of deals that you know best and you know how to work. But I would say right now it's probably industrial, right? I mean, especially if you're going to be building flex space, you know, go check out the video that I did with Hamza, I interviewed him. And then I did another one on like running the numbers on flex space. He just he broke it down in such a great way. And I think flexspaces relatively low risk right now, there are a lot of businesses out there that need flex space, there's not enough of that product in the market. And it seems like nobody's really building anymore. So almost everybody, every developer that I know, that is building flex space, is almost fully leasing that out before they even deliver it. I mean, it's, you can't really get any lower risk than that. Right. And they're, they're typically more of your blue collar industries, which we all know are Amazon proof. Right? You're looking at some smaller ecommerce businesses, you're looking at pickleball courts. I know that's kind of crazy. There are pickleball courts going into flexspaces. You've got podcasting studios, you've got your local plumber, electricians, HVAC companies. I mean, there's just a great flexible use. That's why it's called flex space.
21:17
Anthony's saying, Good morning, Tyler, thanks for your time question how much weight is given to FICO scores and commercial space?
21:25
Anthony Fortunately, for me, it is relatively well.
21:29
I didn't start building my credit score until honestly, like maybe three years ago.
21:37
Because I always paid cash for everything. I didn't want to have a credit card, I didn't want to have to deal with debt. And you know, it's honestly just another box, you gotta check, right? Like, if I spend money on my credit card, I don't want to have to pay 28% on that money. So now I've got to pay it off immediately. And it just becomes this game. Like if you forget, you kind of get in some trouble. But
21:58
well, so I will say like, you know, 2019, I probably had next to zero credit. And I bought for office buildings, because it's, you know, commercial real estate is more heavily based on your cash flow, or global cash flow,
22:12
the value of the asset and the income of the asset, and then they take everything else into account. So my credit score did not impact me when I first got started.
22:24
But it did prevent me from buying a house, which is really funny. Right? So I had about four office buildings in 2019.
22:33
Probably eight or $10 million in value, and I couldn't buy a $600,000 house. So that's
22:43
that's kind of how messed up our, our housing market is, I guess.
22:48
But now I've started focusing on my credit. And it's it's kind of nice, it's like playing a game. Right. So now I've got you know, all the travel cards. So I use those since I'm traveling so much, it comes in handy. So it like it doesn't hurt to build up your credit score and work on it. But it's not going to be a huge determining factor unless you probably have a credit score below like 600 or 550.
23:12
So
23:14
let's see, Kyle is saying I'm in the Pacific Northwest. What are the best types of networking events to look at getting involved with just starting out to find industry contacts and investors? Thanks for all your content. Absolutely. Kyle, glad you're enjoying it. So the we kind of mentioned it earlier with CCM, they have some good networking classes, that's going to be more of your broker contacts. But those are great context to have because they are top performers. They typically know really good investors. And they are finding good deals. So go to CCM events. I'm a big fan of the Urban Land Institute, I just think everything they do is phenomenal. So highly recommend the Urban Land Institute, that's going to be more of your developers, architects, engineers, you know, anybody on the design and development side, you know, green
24:02
initiatives, all of that kind of stuff. So it's really interesting. And they put on a lot of educational events, as well as networking events. So plenty of opportunity for you to network in more educational environments as well.
24:14
There's typical typically like RIAs as well like real estate investor associations.
24:21
Like I was a board member for real estate investors in Nashville for a couple of years.
24:25
Now, those are they typically slant towards residential, but sometimes you can find one that has a commercial aspect to it. So I would go check those out. And then in terms of anything else, trying to think through like what industry associations I will typically go to,
24:44
and honestly, like, utilize at the top. The Nashville has the Nashville civic design center, they put on some phenomenal events.
24:53
If you have like a local civic design center as well, that could be a good group to get involved with but then outside of that you
25:00
I'm just going to chamber events,
25:03
you know, business networking events, kind of those those fun things.
25:07
Jay saying when talking to an off market owner, how do you negotiate commission on a commercial property as a real estate agent? Jay, I would approach that with them on the very front end.
25:18
And you should also approach it with your client too. So what I tell all of my clients is like, what,
25:25
out of the hundreds of deals that I have done, I've never once had to have a client pay my commission. However, what you are looking for is likely going to be off market. And it's, it may be tough, we may find an owner that is not willing to pay a commission. So there's, there's two things that we can do. One, you just agree in our representation agreement that you will pay me if the landlord doesn't, or two, you agree that you will back me up in your contract for the seller to pay me or, you know, that will bake that into the purchase price? Right? So I mean, if the
26:03
if the seller is asking a million dollars for their property, and you want a 3% commission just do 1,000,030, right? At the end of the day, it hardly changes what your client pays at all, because let's be honest, they're probably putting 20% down, right? So they're gonna pay an extra $6,000 For you get a $30,000 commission and represent them.
26:25
You know, I've worked out worked it out with, with my investors to where, you know, I'll just come in as a partner, right? Okay, fine, I'm not gonna get paid a commission, I'll just come in as a partner, you know, whether that's 10 15% 20%, whatever, I'll sign on the debt. And I'll handle the leasing and the management and all that kind of stuff. So I'll kind of run the day to day on behalf of my partner, as well. And my clients enjoy that, right, because they, they are professional, commercial real estate investors, but most of them are really wealthy, and they don't want to be dealing with this stuff on a day to day basis. So having a partner that is willing to put that sweat equity in is always pretty nice for them.
27:03
Let's see, mac hello, sir, is now an impractical time to attempt to put together a small, less than 20 unit residential deal together based on interest rates being so high as I run the numbers that as always the hang up. Yeah, Mac. I mean, I'm gonna be honest with you, man. I mean, residential, like the smaller multifamily, even bigger multifamily deals, all multifamily deals are incredibly tough to put together right now.
27:27
Cap rates are way too low interest rates are way too high for those deals to make any sense. And let's be honest, I mean,
27:35
it is a
27:38
it's a slim margin business to begin with. So when you get into an environment like today, it's next to impossible.
27:46
Let's see, Moby is asking Moby thanks for the, for the Super wack, or Super Chat, whatever that is Moby saying, if you were just starting out without a lot of capital, what would you suggest getting into to make money? Oh, man, that's a great question. So I'll tell you right now, like what my income streams are, I've got the brokerage, which is probably my biggest income stream. I've got the property management company, the development firm, my personal brand, and my investments.
28:17
Hands down, what we're looking at investing the most into right now is the personal brand. And the brokerage, the brokerage has so much more earning potential
28:26
that it makes all the sense in the world for us to continue focusing on that. So I'm doing everything that I can to,
28:36
to just reinvest back into that. And the great thing about a commercial real estate brokerage is that you typically get paid pretty quickly. And the Commission's can be really nice. So, you know, if you don't have your real estate license, but you're you're willing to make it a full time job, then I would highly recommend that. Because broker's just just a great way to earn cash.
29:00
If you are
29:03
more on the development and investment side, then I would say,
29:09
sorry, someone's trying to come in, then I would say, you know, go look at, go watch that video that I did with Hamza, and look at doing some flex development and flipping them for cash flow, I had this conversation with one of my coaching clients yesterday. And you can you know, build these flex spaces and double your money in probably two to three years if you do it right. So that is a great way to get into a heavier cash position. And I was telling him like, then just take that money and throw it into your passive investments. So that's what I do, right? I have a lot of these active developments. I'll take that cash, and then I'll throw it into a more passive one. So for example, we just rezone some land, and we're under contract to sell it. And we're going to take you know, I mean, we tripled more than tripled the value of the asset. We're going to 1031 exchange that into
30:00
Like a Starbucks, right? So we did all of this active work. Now we're going to take 100% of that income, put it into something absolute net or triple net, and just not worry about it. So I think that's a great way to do it.
30:12
What's the saying I want to open up my own salon A plus years experience, and there's so many open spaces, I can't seem to get past the initial meeting with the agent credit is good, some fun saved. Yeah, looks. That's one of those industries, that it's often very tough for a lot of commercial real estate brokers, and I'll tell you why. One, it is a heavy investment on the front end, either for the landlord or for the tenant, because you've got a lot of plumbing that you've got to get around to. And it just makes it very expensive, right, so somebody's got to be able to pay for that. Now, if the landlord is going to be paying for it, then they want to see outstanding credit or personal guarantees from the tenant. And that's really tough for most tenants in the salon industry,
31:00
to be able to save.
31:03
And, but like I mean, if you've got those boxes checked, you should have no problem. I would either, you know, start representing yourself and go negotiate. I mean, of course, get an attorney involved. But start going and negotiating on your own behalf for these spaces or find a really good tenant rep broker that fully understands, you know what you're trying to do?
31:25
Awesome. Okay, I've got time for we're a little bit over, but I'm answering this last question from Robert. Thanks for answering the questions. One, how was the transition of the six Bay carwash into restaurants? Was it difficult with city planning and two, when dividing one space into multiple? Are there any limits?
31:39
Yeah, the the wash was a great project, we actually didn't have any issues with the city.
31:46
Once we kind of had the path that we're on now getting started, the whole reason that the wash came to be was because the city had a right of way dedication. So if we tore the building down and pulled a new construction permit on that site, the city was going to condemn 20 feet of roadway, tiny little parcel. So of course, that's like a third of the site. So we ended up getting a renovation permit instead kept the existing structure and just built within it. So once we figured that out, not a problem at all. The only other thing that we had to work through was the parking now it's a 10th of an acre, you've got six hospitality concepts on it. Normally, we would have needed over 20 parking spaces. But while we were under contract, we were actually negotiating with a couple of our neighbors to rent some parking spaces from them.
32:38
And while we were under contract, the city passed a no, no parking minimums on that corridor. So we ended up not having to have any parking. So we could take advantage of the street parking that was already available there. Which, which was pretty great. As far as dividing one space into multiple and having limits. I mean, I would say
33:00
especially on the commercial side, it kind of depends on the zoning, but in Nashville, like there is no limit to the amount of units other than, like your parking requirements. And maybe just the marketability, right, like obviously, you don't want to start dividing up in a 50 square foot office units, because you're gonna have a hard time leasing those.
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But
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as far as like number of units, most real estate zonings don't have like limitations on that. It's more based on like your floor area ratio, how much of the land you're covering with a commercial building. So I mean, I would say, you know, as long as you can park it, I mean, double check with your zoning, right. But as long as you can park it, you're probably pretty good. And I like micro units. I'm a big fan, as y'all can tell from the wash 4013 Travis drive, the first project ever did the project that we designed for Newell tower that we ended up not moving forward on because we sold the building so fast.
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I think micro units just lease up so much faster. It's it's less,
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less risk, in my opinion. Now, there are plenty of bigger developers out there that will say they don't want to deal with smaller spaces. But man, I think that is a really great way for you to lease up spaces faster at a higher rate per square foot, but a much lower overall monthly rental rate, which is all the small businesses are going to be looking at anyway. As long as it checks their boxes, they can set up and operate out of there. They would much rather pay $1,000 less a month for you know, 250 square feet if it checks all the boxes, so awesome. Well, I appreciate you all joining me for this week's office hours. Of course, we're doing this every Tuesday at 8:30am Central Standard Time. Sorry for everyone else whose questions I didn't get around to but jump in next week and be the first one to ask your question. I'll make sure I get to it that y'all enjoy the rest of your week. Pay attention for a vlog it'll be coming out on the project that I'm doing on why I'm in Milwaukee today. And we'll see you all then
In an upcoming discussion with Jacob Kromhout, my project manager from Bentwood Construction, we'll share the latest construction updates at Salt Ranch, my boutique hotel in East Nashville.