Question for Shopping Center Owners- Am I Missing Something?

Question

Hey BP!

Earlier this year I started a bit of a side hustle to place ice vending machines in the parking lots of shopping centers and other open lots in Florida (Jacksonville area, specifically). It seems like I have a great deal for a property owner- I want to lease a 15' X 15' space for the machine, for which I will pay $600/ month or so. I handle all setup costs (mostly running utilities, but in some cases laying a small concrete pad) , pay all utilities (incremental to the money for the lease), insurance, etc., so the only commitment from the the property owner is really in the space they're providing me for the machine.

I've been searching for parking lots on high-traffic streets and thoroughfares and although I have found many and contacted the owners and/ or property managers of these properties, I've had a ton of trouble getting any property managers or owners to show any interest whatsoever. Is there something I'm missing? Most of these parking lots/ shopping centers have extra spots or areas which never seem to be filled with cars, so it seems like a lay up for them to generate extra revenue with little-to-no effort on their end.

Finally, short of looking on the DOT and county sites, is there a way to build a large list of these "ideal properties" with contact info without having to spend hrs driving around or looking on Google Earth and researching contact info on the county site? I'm starting to think it is going to take a "quantity over quality" approach just to find a couple of interested owners/ property managers...

Thanks for any advice!

Chris

Evan Polaski · Answer

@Chris Heinmiller, I will echo what the others noted.  You are introducing liability for little gain.

But beyond the potential liability, you are likely hitting:

DOT/Zoning issues: Parking lots do not generate revenue for landlords, so when being built the developer seeks to put as much GLA per parking spot as possible.  The "space" you see is very likely required.  This could extend to mandated traffic patterns, too.

Exclusive Use issues: most any national tenant will have exclusive use clauses.  If you are targeting any centers with grocers, convenience stores, possible hardware stores, etc, they are not likely to be able to lease you space.

Sight line issues: similar to exclusive uses, many national tenants will have clauses that keep anything that could restrict sight lines to their space/signage.

Where I would guess you can likely to get the best traction:Search corporate owner websites for specialty leasing teams.  These are typically roles that sit at corporate offices and source/negotiate these types of leases.

Look for run down centers.  These are less likely to have the same lease restrictions and likely to have owners that are more open to any dollar they can pull in.

Talk directly to convenience stores/gas stations.  Many have ice already, but if they are only making $300/mo from their current vendor and you are offering $600 and in a way that the clerk doesn't need to be involved (pay at counter), you could start getting some market penetration (this is similar to the private vending machine business).

Mohammed Rahman · Answer

Hey @Chris Heinmiller - I've looked into this as well and also have been around commercial owners.

What's the benefit here for the commercial owner? Besides getting paid an additional $600/month, what risks are they taking on while having to pay extra utilities and possible maintenance to ensure your machines aren't damaged by vandals, weather, etc.

If something is on the property, it's partly the responsibility of the owner.

The vending machine falls and injures a tenant or visitor of the building - whose liable? How does this affect their insurance premiums? Etc.

Additionally, why would the owner lease it out to you when they could very well bring their own in-house machines and keep a bigger margin? Sure more up front costs but if they're managing a big commercial property why wouldn't they be able to figure it out?

Not discouraging you, just saying there's other things to think about as a commercial property owner.

Ronald Rohde · Answer

Great reply, we just provided a thorough, well thought out $5,000 analysis for a crappy $600 business.

Ronald Rohde · Answer

I imagine these are big ice creating machines, these dont fall over, right?

Back to the owner reluctance, I don't like the image it portrays. Poor people use this and I don't want them bringing traffic to my property without buying anything from me. $600 is not much, even at a 5 cap. Also, just because the spaces appear empty, they may be required for use. The LL may be tight on restaurant sq ft based on parking, if giving up 1-2 spaces affects the ability to bring in a huge restaurant tenant, they just shot themselves in the foot for pennies.

Question for Shopping Center Owners- Am I Missing Something?

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