Are strip malls good investments, and what should I check first?

A strip center can be a solid investment when it is anchored by necessity tenants, sits on a busy road in a growing trade area and is bought at a basis that covers re-leasing risk. Check the tenants first: who they are, when their leases end, what they pay compared with market rent, and whether they reimburse expenses. The first five checks 1. Tenant mix: grocery, pharmacy, medical, food and services hold up better than tenants that compete with online shopping. 2. Lease expirations: a large share of rent ending in the next two to three years is a risk and a negotiating point. 3. Rents against market: tenants paying well above market may leave or ask for cuts at renewal; tenants below market are upside. 4. Lease type: triple net leases pass taxes, insurance and maintenance to tenants; gross leases leave them with you. 5. The site: traffic, access, visibility, parking and the trade area's population and income trends. Then the numbers - In-place NOI from the rent roll and the operating statement, not the broker's pro forma. - Price per square foot and cap rate against recent sales of similar centers nearby. - Cost to re-lease a vacant space: tenant improvements, commissions and months of free rent. - Roof, parking lot and facade condition, which are the big capital items. When to walk away A center that only works if every tenant renews at higher rents is priced for perfection. So is one where a single tenant drives most of the income without a long lease. Titleman reads the rent roll and leases, checks rents and price against market comps, and flags expirations and gaps in a cited report. See an example: https://titleman.ai/products/deal-review