Renting to Starbucks, dunkin donuts
Wellsburg, WV · Member since 2017 · 7 posts · 0 votes
Renting to Starbucks, dunkin donuts
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Rental Property Investor · Cranford, NJ · Member since 2019 · 245 posts · 148 votes
6yOriginally posted by @Greg Dickerson:
These types of deals are built, leased up and sold by developers not the tenants. The tenants are not developers and do not want any part of the real estate and development business.
It requires too much capital and time that is better used to opening new stores. Example would be a $3.5 million building requires $750k in cash and the rest in debt and a year or more to develop from concept to completion. They can open 10 leasehold spaces with the same capital and timeframe with zero debt. It's not their business model. They are retailers and that's the focus. You will find this in the NNN space with all the major regional and national chains. Some smaller mom and pop operations might want to own their own building but not the big boys.
McDonalds would disagree with you.
https://medium.com/@alexcjensen/forget-burgers-mcdonalds-is-a-real-estate-company-49658d4d9061
I've seen Two River Bank (249 N Ave W, Cranford, NJ 07016) built practically overnight. I spoke to an architect in KC who had a thriving business in the 80's wither away 20 years later. He told me the reason was Franchise is King in KC MO. And they buy one plan and use it over and over and over.
You seem to have more experience than me in this. I have a 3 store strip in Lyndhurst NJ. I'll pay you a handsome commision if you land me a favorable lease with a National Tennant. I'm not here to argue or insist, just learn and gain knowledge. So like I said you seem to have a lot more experience than me, if you say companies do not make a profit of the erection and development I'll take your word for it. Thank you for your time Mr Dickerson, I always love reading your comments and gain much from it.
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- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes6y
Starbucks generally has a specific tenant rep broker scrub their sites for certain areas. They do not want to talk to tons of land owners telling them how great their site is.
They want the tenant rep to save them time. Once tenant rep scrubs the site then it can go to the next level. That is when tenant rep broker and Starbucks real estate have discussions about the site. If it goes further you can have an LOI from Starbucks and then committee will usually come out to tour the site in person.
If all that goes well and engineering looks good for water usage requirements and being able to get a drive thru in then might move to the lease stage. Starbucks usually takes about 6 months or so for commitment. National tenants are methodical with their processes for site selection and take their time versus regional to mom and pop that can move faster to take spaces or land to build on.
An exception can be an (A) site where the land owner demands a quick decision. If Starbucks knows that site is superior for the market they might jump on it quicker but if it's a (B) type site where they have multiple choices in an area then they can pit the owners against each other trying to negotiate lease terms and rent rates in their favor. I called hundreds of tenants before and what I found is most have tenant rep brokers working exclusively with certain brands. There are very few national tenants that deal direct. There is a ton of work involved as a leasing broker so I do not get involved in that. I stay on the investor side of owning the properties or I transact with my clients buying STNL and MTNL. Once you realize how intensive and time consuming leasing is you tend to stay in your own lane and then compensate those that enjoy doing that leasing part as a business model.
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