All Forum Posts by: Damon DiPlacido

It's one thing to get the property in front of the right person, but then what? If you've never negotiated a retail deal before, I wouldn't recommend by starting with negotiating an LOI on your own with Starbucks. Find a good RETAIL leasing broker to represent you, who has the retailer contacts and has experience negotiating chain store deals.

How big (acres) is the property you are purchasing? Is it land or is there a structure on it, and if so, what is it? What is the access like? 

What type of real estate? Retail? What type of tenant...mom & pop, national credit tenant, etc? This all makes a difference. Also, tell me more about where you say 'no rent until construction is complete." Is this the exact language agreed to?? Please clarify. If they are doing the interior fit-out, you need to have timelines in the language. Also, when are you paying the TI? This need to be covered. It should be not until tenant has a C.O. and proof of receipt of lien waivers. Lastly, if it's a mom & pop tenant, most smaller LL's would prefer to give a rent abatement period after opening rather than cut a check. Provide more specifics and we can give you some better insight.

I mean this sincerely but it seems like an odd question to ask.  I cannot imagine any scenario where a listing agent secures a $90m listing without demonstrating his experience/knowledge to operate in this arena. Even on my deals, at a fraction of this price point, every listing appointment I go on there is always discussion about similar deals I've done, discussion of my relevant background, and who I know. Every listing appointment is almost the same. 

HI Julia - Thanks! As a commercial landlord/owner, you will likely need to use these provisions at some point, so definitely keep  them handy. 

John - Here's a good article about handling this topic:  http://www.coxcastle.com/news-and-publications/200...

Always get something in return. Look to strengthen the lease language, for example, if the lease was negotiated removing any "landlord friendly' clauses this is your opportunity to add it/them back in. 

Finding a balance is important - as you mentioned, you want him to succeed and potentially buy the real estate. At the end of the day, the goal is to retain the tenant. Not just in this example, but it almost always makes sense to retain a tenant, even if it means taking a slight haircut, rather than replacing the tenant, once you factor in lost rent on vacancy, legal fees, brokerage fees, free rent and/or TI for the new tenant.    

I looked up the address and this is a very small market, and looks like the former DG is on a side street with not the best exposure. Also, building appears to be 80 x 100, correct? I can't see the new building yet on Google earth, but betting part of the reason they moved was to re-orient their exposure to the street for better exposure. You should engage a local broker and think about expanding beyond retail here, and think local tenancy. Unfortunately, filling it with another national chain is low probability. 

Can you further clarify the purpose of your question? Landlords don't like to give options as it gives control to the tenant, whether to stay or go. The simple answer is if your business is profitable you stay, if it's not, you should still think long and hard before pulling the trigger to move due to the cost to fit out a new space, timing involved finding a new location, legal fees for lease negotiations, etc.

Robert - Couple of comments. 1. Houston is a hot market for restaurant retail, and if you have a good location, you as the LL should have some deal leverage to command a 10 year initial term with two - five year options, rather than a 5 yr with three options.  2. I have done 4 QSR franchise deals in the Houston market in the last 12 months and typically for a basic LL vanilla shell delivery (i.e. without upgraded electrical, hvac, gas, etc), the TI ranges between $20 - $30 psf for a 10 yr initial term.  Note on my first point, we've had some franchisees try to do a 5 yr initial term, and the LL's wouldn't even consider them. 

Will this be a franchise concept or are you doing this as an independent concept? For a first time retailer, you will strengthen your credibility with landlords if this is a franchise concept where you are part of a branded concept, you go through a formal training program, and you have processes and systems to follow. As the 'food category' of retail is a busy category, Landlords with decent to better real estate may be reluctant to lease to a first time restaurant retailer, especially a first time independent operator (not franchised) due to the high failure rate and the fact there is a lot of competition for food retail locations and LLs can often pick who they want.