Getting Starbucks as a tenant

7 Replies

Recently obtained a drive-through commercial building in a growing area of the Poconos. High traffic road that would make a great location for a Starbucks, close to both a college and high school. Was wondering if how to start the process of getting Starbucks interested. I don't want to run a Starbucks just rent to them. The building would need to be renovated to fit their style of course, do they have their own corporate team that does the renovations or would I have to get my own contractor to do it?

Any help/advice in this situation would be appreciated! This is my first commercial property but I was very familiar with the area and it seemed like a lot of potential so I went for it.

Starbucks does not have franchises in the U.S. they are currently all corporate stores. They do occasional partnerships with local onsite college bookstores that sell their products etc.

Only franchises I have seen is overseas with master agreements.

As to Starbucks they have a corporate contact but they have a local tenant rep commercial leasing broker that screens potential sites. 

Just as you are asking questions on here so are thousands of other investors without the specialized knowledge and the VP that works at Starbucks doesn't have time to ask questions or talk to those people so they have leasing brokers do that for them. Then when they scrub through the sites submitted and leasing broker says it might have merit THEN they discuss it further and MIGHT put in an LOI. Since it is big corporate it can take awhile for them to make a decision.

Everyone wants credit tenants on their dark sites because they tend to pay the most rent per ft and sell for the lowest cap rates when the owner eventually wants to sell for equity gain payoff on the back end. 

Hmm thank you for the detailed reply. I was aware of the franchise aspect but not the other details.

I guess my next question would be how to get in touch with this person- the local tenant rep commercial leasing broker

My commercial real estate broker has direct contacts with some regional and national credit tenants, so it may be worth asking the top commercial agents in your market. Even if they don't know the people directly, there are web sites that'll list the property for those credit tenants to view and determine suitability.

@Thomas Don I agree with alot of what Joel does but have heard Starbucks requires significant tenant improvements paid by owner so thats also why they pay more on lease. I have a colleague who opened a shopping center and got Starbucks placed as a tenant and just the act of getting Starbucks placed as a tenant increase the value of the strip center so much that his partners decided to sell. Starbucks also has easy outs on lease if they don’t hit sales numbers although rare.

The amount of TI needed by Starbucks will be determined by a new build ground up versus a reposition of an existing vacant single tenant building.

If past use was restaurant and or coffee shop type then not as much build out versus a medical tenant previously. It's all situational. Starbucks prefers to be freestanding although occasionally you will find inline in a retail shopping center if location is superior or that's the only space available in the market currently.

What outs Starbucks can put into a lease usually determined by quality of your site. The better the site and more tenants want it generally the LESS leverage Starbucks has to make demands.

It can be true on a retail center that if you land a junior anchor tenant like Starbucks and change the mix percentage of the center from all mom and pop to some national credit the cap rate can compress some and sale price can go up because of more perceived security of the cash flow long term and generally better loan term and rates.

Thanks to everyone for all the advice so far! Going to start contacting people once I'm back from vacation. 

Some more details on the building- it's a standalone building in a plaza, across from a supermarket on a high traffic road. It used to be a bank so there would definitely need to be some remodeling, it has a drive-through. The plaza isn't the best but there is a bowling alley and gym in the plaza so it has some attractions already and plenty of parking. One negative is the plaza does not have its own traffic light.