How to value parking spaces that are to be leased from a neighbor

[Joshua Andert]

Hello!

So I've got a bit of a pickle here and I'm hoping some of the BP experts out there might be able to provide some help or clarifications.

I'm under contract to purchases a multi-use building.  There are 4 apartments on the second floor (3x 2/1 and 1 1/1).  On the main floor, there are two retail spaces with approximately 1700 sq ft each.  The building essentially has been vacant and ignored for 10 years, however, the structure is great and the neighborhood is on the up and up.  The rental of the apartments would cover all debt (including rehab) and the retail rents would be our gravy or cash flow.  Based upon how the neighborhood is trending and the city is developing the area, we would love to pull in some boutique shop, small restaurant, ice cream parlor, etc... that vibes with the millennials taking over the city.

My problem, or pickle, is that there are only 11 parking spots on the property--6 in the rear to service the apartments, and 5 out front of the main street by the entrances to the retail space. According to zoning, I would need 4 spots for every 1000 sq ft of retail or restaurant space.  The math tells me I'm short about 10 spaces.  To make matters worse, there is no parking on our side of the street or any street spaces that are within the allowable range for us to count, at least according to the city.  Without more parking, we're hosed when it comes to finding strong commercial tenants.

Our potential salvation lies in with the neighbors.  Next door, there is a brew pub with 85 spots.  On the other side is an auto shop with 20 spaces.  My partner and I have spoken with the owners of each, and they are both amenable to some lease agreement that would allow our potential tenants' customers access to their parking.  The city was also on board saying that is really our only option.  

So my question is, how do we go about assigning a value to those parking spaces?  We'd need a long term lease 3-5 years for the city to be good with plan, but I'm not certain what a lease would look like for such a situation.  

Please let me know if you have any experience or advice in this area.

Thanks!

P.S.  This is my first BP post.  I've been a long time fan of the podcast and read several of the books.  I'm now attempting a shift from investing in small scale SFRD's as a side hustle to making a go as a part time investor/ flipper of small scale commercial buildings.  Will hopefully be engaging much more in the forums as I start some new ventures.