Looking at a spot for a new shop.
There is currently a burger shop in there- opened in 2013.
They have tons of money and this was a “hobby” for the guy’s sister- something to keep her busy.
Guy and his sister own the building- sales are $5K/week.
The business and fixtures/equip are for sale… $200K.
They broke it down to $80K for the business and $120K for the equipment. I went through the shop and could not have spent more than $40K on all the equipment in there… if I tried hard.
I said “Well, I don’t want the business- just the location… and the business isn’t worth anything, really”
I was very nice and respectful, by the way… not insulting, just made it clear that I wanted to put a pizza place in there so… don’t need the business. They kind of knew that nobody would pay for the business…
Semi-turn key- exhaust, hood, air, sinks, licenses, permits (need to re-do but… all good stuff) as well as a walk-in cooler, freezer, etc Everything I’d need but a makeline and oven.
I said “Where are you coming up with this $120K for equipment, because I can’t get close to that and still need an oven and M/L which will be $40K?”
They said “Well, that includes the build-out; Walls, ceiling, two bathrooms, etc”
I replied “But you own the building and those are leasehold improvements that almost any tenant would need, and I can’t pay for your new bathrooms, floors, etc and pay $2000/month in rent”
Am I freaking crazy?
Now, I did say “Look- I will pay for anything and everything you did that I can use- you spent $10K on the hood- here’s $10K, the gas piping was $10K and I would need that… here’s $10K- and I’ll but ALL the equipment at almost the price YOU PAID” I think I said I’d give them $75K for $40K worth of used equipment (though very lightly used) and the rest compensation for fit-up relevant to me… or what I can use.
I guess my question is… am I crazy in thinking they are FREAKING crazy to think a tenant will pay for their fit-up-remodel-leasehold improvement costs and then pay full rent, as well? The whole thing seems absurd.
I’ve always dealt with LL’s and said “Anything specific to me is MY responsibility” but you need to give me standard floor (if I want better, that’s on me), a bathroom, 4 walls, etc.
Whats the square footage? And is there parking?
I think I would take the attitude of I’m looking for a place to rent to open a pizza shop, I’m not interested in a burger place. While there is some value to some of the equipment and the work that has been done here, much of it will not work for my application. If you’re dead set at 200K plus 24K per year rent, I’m not your person. Here’s my card, please give me a call if things change.
Sometimes argueing the value with someone just makes them dig their heals in further.
The rent is, by the way, fair- not high and not low… about what it should be. If it was crazy cheap… you sorta factor that in a bit.
Kind of a downtown type spot- no parking.
It’s a decent spot but I won’t be putting my kids through college. They’ve been there for 4+ years and haven’t made it.
I have not even spoken to the LL, though I have met him in the past while looking at another spot- all the discussion has been through the agent.
It’s around 1800 SF.
Sometimes argueing the value with someone just makes them dig their heals in further
Spoke last at a bonfire (gotta do that more!) I had in my backyard with friend who is an attorney about this- he said much the same, Paul. he said “People who come from an unrealistic position rarely change their view”