What are common incentives to get good tenants to fill your space

[Adam Craig]

We are rehabbing a 25K 3 story building and looking to attract a restaurant go to into the first level. The city is a major help because they were the ones who came to me when I bought the building and they are offering any help they can so I can fill it with a restaurant because its a big part of their plan to revive what used to be a thriving downtown area.

 The city has been reaching out to restaurant owners and setting up showings. I just walked through the building with a restaurant group looking to expand and they seemed to have some strong interest.

What are some common incentives I can offer them or future prospects to make it happen?

My initial thoughts were 6 months free rent and $5000 in building out assistance. Is there anything else I can offer or is $5000 a low number.

To put the numbers in perspective - The total project for rehabbing levels is going to be around 500K and the lease for the restaurant could be 4-5K a month so the lease would heavily contribute to the NOI. I have no idea how much their build out would be for the restaurant but I would imagine 150-200k ?

[Eric Cornwell]

We own and operate restaurants in our portfolio - we are trying to find landlords that understand the current issues related to labor and generating business. That said - we are seeing offers now that are basically free rent for 3 / NNN's only for 6 / and 1/2 rent for 9 / $20psf TI (5,000 sq.ft.) - this is just to get a "buglight" in the building and help attract tenants. A restaurant can only operate under certain parameters - so you should understand what your basic revenue size is for the space - i.e. $/seat/yr. You can want $60K NNN but if the site is only a $600,000/yr operation it wont work... if its a $1.5MM restaurant space, then its great - leave meat on the bone for the operator and take a piece if it hits it out of the park. My $0.02