Why doesn’t Walmart list price for their out parcel land?
Hi everyone, I’m a newbie to commercial real estate, really want to buy a lot from Walmart out parcel and build a small building. When i call the company that handle it, they only send me some restrictions for the building and tell me to send in offer. Why don’t they just list the purchase price so we don’t have to go through the hassle of appraisal and offer? Thanks for any advice!!
[{"id": "hu2i7ug", "text": "To let you set the initial price, see how informed you are, and proceed accordingly", "replies": [{"id": "hu3mwyq", "text": "I can tell you, most of them don't really know much about the out parcel outside of BV.  The way they move people around, it's difficult to really know the real estate.", "replies": [{"id": "hu67elf", "text": "100%. Worked a deal years ago to purchase a parking lot carve out. REM changed 4 times during the whole process. Some were accommodating, some seemingly knew nothing about real estate, and the last guy literally said \u201cI don\u2019t know why the hell we would sell this at any price\u201d and would not work with us at all. Also the PSA was like 66 pages long and required the buyer to pay 100% of all costs. Not a dime out of pocket for WMT. Was a frustrating experience to say the least and ended up punting the deal after way too much work.", "replies": [{"id": "hu68gzs", "text": "Haha, that\u2019s Walmart Real Estate.  Not laughing at you of course, just the overall process.  Walmart can, and does lose million a year in this real estate, but they honestly make so much money it doesn\u2019t even matter.  The fact is, saving a few million is just a rounding error for the entire company.  Bringing these deals are 100% up to the REM, and if they don\u2019t want to do it for whatever reason, good luck.\n\nThey are not incentivized to care, have no sense of urgency, and so unless you are established and somewhat successful, it\u2019s unlikely you\u2019ve got the patience and capital needed to get to the finish line.\n\nThat said, they do have some good REMs, but it\u2019s hit or miss, with it mostly being miss.", "replies": [{"id": "hu6v7km", "text": "Yup. The first couple REMs were good. They worked with us and understood our perspective as developers regarding timing, approvals, etc. It went downhill from there, however. PSA requires umpteen WMT approvals (which they can outright deny for literally any reason btw) along the way yet you can never get anyone to respond to an email or phone call. The cherry on top of this shitshow was the tenant we were negotiating with in parallel for the outparcel was Starbucks. If you\u2019ve ever dealt with SB, I\u2019m sure you can appreciate. I think I aged like 5yrs during that non-deal.", "replies": [{"id": "hu6vwhq", "text": "Basically what happens when an unmovable force meets an unstoppable object.  Being in the middle of two behemoths in their respective industries is not a fun place to be.  Plus, Walmart always has the right to terminate without penalty (usually) if approvals are not given.  So if a VP feels like not approving it for some reason, maybe because the REM didn't bring their A game, or earnings came out and it was bad, or the VP just felt like saying no, then you're SOL.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hu2puvn", "text": "because he who talks a lot sets the floor price. You can still eyeball it using comps but ultimately you want the land more than they want to sell it", "replies": [], "depth": 1}, {"id": "hu2vcug", "text": "Walmart is concerned about walmart not maximizing its re value.  They leave stores vacant for years just in case they want to reopen in the future.  They want you to make a proposal so they can evaluate how it may drive traffic to them.  They will want fmv but some of their concerns will go past just trying to sell for the most money.\n\nAs some else mentioned they dont want to deal with amatuers either.  If you cant figure this out they probably dont want to waste staff time on it", "replies": [{"id": "hu3mry2", "text": "Walmart doesn't keep stores vacant because they might want to open it, they keep them vacant to protect themselves against competitors.  A vacant big box is perfect for a competitor, and so keeping it vacant ensures their sales are not negatively impacted.\n\nWalmart will not go back into an old box, because it makes no sense to do so.  Maybe it's been done, but it would be a one off.  Maybe cross format would work, say a Sam's or before neighborhood market, but overall no one is trying to go back into an old box.\n\nFMV is wanted, but above BV is really the driving factor.  FMV may be X, but if it's below BV, there will have to be a compelling reason to sell. \n\nAs for amateurs, it's not that they don't want to deal with amateurs, it's that amateurs don't have the patience, or the ability to stay engaged over the amount of time it will take to get a deal done.", "replies": [{"id": "hu3qegr", "text": "That all makes sense.  Again, just speaking from my experience.  \n\nThe one I tried to lease was within a half a mile of a Meijer, kroger and bigs at the time.  The coin might have flipped on that from shutting out a competitor to them no longer being able to reenter that market.  Either way we offered to buy or lease and got no response for 30 days and then were told lease only with 9 months landlord option to end.   So thats my experience on that, no clue how you do a deal with that in it outside of the halloween folks.\n\nIn my other ones I had a lot more interaction.  My experience was no one but me cared.  Long response times, them just blowing stuff off, etc.  At the least I could clearly communicate and discuss these things with them.  I generally always got the impression the best way to get anything was to make it as easy as possible on that particular person.  If you send them a low ball garbage offer that looks like you are going to be hard to deal with i feel like the specific person who is the contact just wont bother.\n\nAgain just speaking from what ive encountered.  Walmarts a big place and I have no experience on the other side.", "replies": [{"id": "hu3urol", "text": "You did what you needed to do, and yes making it as easy as possible is what you need to do.  That said, whether the Walmart REM does anything is a coin flip.", "replies": [], "depth": 4}], "depth": 3}, {"id": "hu5m709", "text": "What is BV? The value another big box store would pay?", "replies": [{"id": "hu5mnjz", "text": "Book Value.  It's essentially the gross cost less accumulated depreciation for an asset.  It's the value that the company has on it's balance sheet, and if the value is below BV, even if its at above FMV, won't usually equal an approved deal.  That said, there are times where Walmart will sell below BV, but depending on the gap it would require high levels of approval, which increases time, and makes the likelihood of coming to a deal even less likely.\n\nRemember, Walmart is not a real estate company, they are a retail company.  Real Estate is a byproduct of what they do, and so while maximizing real estate is a goal, it takes a backseat to things like Operations, eCommerce, and Logistics.  The higher you need to go to get approvals, the longer and less likely it is for your deal to get approved.", "replies": [{"id": "hu5o4of", "text": "Oh duh, I know that term I was just focusing on the wrong stuff. Thanks.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hu2w3tw", "text": "Never negotiate against yourself.\n\nThis is why Walmart responded in this manner.", "replies": [{"id": "hu6cc75", "text": "This is correct.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hu3fh3h", "text": "It should have a list price. Are you the buyer or a broker? If the buyer, ask the listing agent for their BOV and see if they will share (most likely will not but worth asking the question) or find an agent to represent you and perform their own BOV. Broker Opinion of Value = BOV. An agent representing you will perform a BOV at no cost. It will be backed up by market sale comparables and give you enough information to make an informed decision. Make sure you review the use restrictions they provided to you. Walmart typically has a long list.", "replies": [{"id": "hu3lotf", "text": "It could, or couldn't have a list price.  But a BOV could be worthless, depending on whether it takes into account all of the restrictions Walmart has, which you highlighted.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hu3k1dl", "text": "So Wal-Marts internal process for land sales is really convoluted and they don\u2019t always know what the value of that land is to them. They don\u2019t even give the brokers a whisper number on the land value so it\u2019s likely that any BOV you get is strictly going to be based on that brokers knowledge of the market and their experience with Wal-Mart.", "replies": [{"id": "hu3ljcb", "text": "Spoken like someone who has worked with them, because that's 100% true.  Most of the people there don't have a ton of real world real estate experience, with most of their experience being Walmart Real Estate, especially retail experience, meaning they only know how to operate when they are the 800 pound gorilla in the room who can push everyone around.\n\nThe broker could have an idea on the price, but it really depends on the REM managing the process.  That said, with how much things change, you could change REMs several times before a transaction is done.\n\nLastly, even if you get a price that makes sense for both of you, and are aligned on restrictions, getting approval to have the documents executed could take months, depending on whether the REM wants to work on it that month or not.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hu57pvi", "text": "I just wanted to say this was a really interesting thread to read. Thanks to OP and all people commenting!", "replies": [], "depth": 1}, {"id": "hu70dfw", "text": "Thank you all for y\u2019all inputs. Obviously I didn\u2019t know what i was getting into. Y\u2019all saved me a lot of time and money.", "replies": [], "depth": 1}]