Tenant Rep and A Stubborn Landlord: Would like to hear thoughts on a current deal I am working on.
So I am tenant repping a pizza user whom I cold called. He is a staple in the city having been there 25 years. He is on a month to month and his landlord won’t let him sign a long term lease because he has plans to redevelop this land into multi purpose.  


He told me go ahead and do a search but he does not want to leave downtown so I have about a 4 mile radius of his current site to look thru. Another major point is he NEEDS a parking lot. The problem is there are virtually no retail spaces with a parking lot in this downtown market. I looked at everything that was listed for lease and nothing worked.  


I ended up cold calling the property owner of a run down Thai restaurant with a drive thru and parking lot about two doors down from his current location. The landlord told me his current tenant is filfthy, dirty, doesn’t up keep the property, is late on rent payments etc.  


I told him I have someone that will sign a ten year deal, guarantee a handful of years, put some money into the space etc. the problem is he is asking way to much in rent and for sale price. My client is $2000/mo under LL asking price but based on the market and condition of thr building we are right at market rent if not a bit more. He is firm on his price and won’t move not even a little. He wants $1M for the building my client would be willing to go to $700K.   


My question is what would you do/say to the landlord and your client.  


1. This property checks every box my client wants and more! Because of the drive thru and there is absolutely no property like it in this downtown property.   


2. The landlord is so stubborn and won’t move.  


Should I tell my client to come up in rent or anything else I could do to sweeten the deal for the LL without paying his asking rent.  


I’ve done plenty deals but this one is a bit challenging because there is no second option for my client to move on from this.  


Curious to know your thoughts! and apologize for any types - sent from i phone.
[{"id": "h9cd8nu", "text": "Sounds like this landlord has a unique site and wants a price commensurate with its positioning in the market.  Pay the freight or go to another site.   I think you said it yourself \"there is no second option.\"  \n\nSource:  Landlord.", "replies": [], "depth": 1}, {"id": "h9cehqd", "text": "If the landlord wont come down the deal probably wont go through. Can't be afraid to walk if its whats best for the client.", "replies": [], "depth": 1}, {"id": "h9cesu2", "text": "How much is the asking rent and taxes on the potential new space?\n\nBoy, a property like you describe, if it actually is perfect for the pizza guy and he wants to be in business for a long time, would be really nice to buy.  Rates are still so crazy low.  I bought a building for my business a few years ago and at the time it felt like I was way overpaying because it's uniquely perfect for my business.  I have NEVER regretted it for a second.  If your tenant and the owner could find an agreeable middle ground between 700 and 1m to buy the place, it could very well be the smartest thing he ever did.  Interesting situation, good luck!", "replies": [{"id": "h9fovsg", "text": "Asking rent $24/psf + $9.6/nnn on 2,500 SF", "replies": [], "depth": 2}], "depth": 1}, {"id": "h9cjoox", "text": "You have to listen to what the landlord actually wants out of the deal. You have many levers that you can pull. It's unlikely that the landlord is fixated on all of them. Never split the difference. If you split the difference, you're in a lose-lose when you're looking for a win-win. It sounds like your client is focused on a ten year lease: what is important to the landlord that isn't important to the client that you can give up to get a deal done?", "replies": [], "depth": 1}, {"id": "h9cmp67", "text": "I'm confused;\n\nYour client is trying desperately to rent a property, offering monthly rent and the two parties don't agree on the amount by approx. 2 grand a month and he's frustrated that he can't sew up that deal, but, the owner wants a million for the building and your client only wants to offer 700 grand.\n\nNowhere in the above post is there a discussion about either party wanting to buy (or sell) the property.\n\n(One of these things is clearly not like the other).\n\nDid I step off on the wrong planet?", "replies": [{"id": "h9fobyo", "text": "Client would prefer to buy, LL is not motivated to sell. That is why he is asking more than worth. Yes, I should have stated this..", "replies": [{"id": "h9fofjl", "text": "But he would lease if no option to buy", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h9cursv", "text": "Sounds like it could be a homerun for your client to purchase but I'm a landlord and not a restauranteur. My thoughts:\n\n1. Just making a SWAG, you're looking at $1,500 - $3,000 more per month I payments at $1M vs $700k. Has your client looked at the added benefit of principle pay down? It'll hurt his cash flow at first but he'll get way more equity in exchange compared to rent. \n2. Make sure your client understands the advantage of moving from a month-to-month to permanent location only 2 doors down. Huge advantage for marketing and retaining buyers. Never underestimate the cost of moving in lost buyers/sales. \n3. If the site has a drive-through, does that offer your client the option to grow sales or expand their offerings?  Can he do anything with leading the parking lot if he has ample parking? Either option will help offset the higher costs.\n4. Similar to point 1, but talk to your client about his succession plans. Owning a solid piece of real estate allows an heir to continue the business or allows him to step away from the business and become a \"passive\" landlord. Restaurant owners bust their ass and I've found that when they want to get out, they need something hands off. \n\nGood luck with the deal. Hell, I think some of us would buy it based on your pitch.", "replies": [{"id": "h9eitf1", "text": "Not wrong", "replies": [], "depth": 2}, {"id": "h9emwdl", "text": "Good points", "replies": [], "depth": 2}], "depth": 1}, {"id": "h9deyo1", "text": "What city has a building and parking lot in a CBD for that cheap? Des Moines?", "replies": [{"id": "h9e482y", "text": "Nearly every large metro in the country other than NY or Chicago.\n\n(Down voted by someone who doesn't like to do a lot of work).", "replies": [{"id": "h9eow9i", "text": "That\u2019s insane. I\u2019m in Chicago and you can\u2019t even get a surface lot for less than $600/sq", "replies": [{"id": "h9f4l10", "text": "I never said the site would be 500,000 sf.  Just that a building with a parking lot in a CBD can be found in most major metro areas.\n\nIt's not at all difficult to find them.", "replies": [{"id": "h9f4tdb", "text": "In Chicago you absolutely cannot get a freestanding building or even land for $700K in the CBD", "replies": [{"id": "h9f6mto", "text": "You probably missed this part:  \"Nearly every large metro in the country *other than* NY or ***Chicago***\".\n\nHowever.....\n\nHere are 6 (one is even a food service asset...ready to go).\n\nThis took me all of 11 seconds to find.\n\nNot a single one is over 500K.  Give me 30 minutes and I'll find you another 75 (in Chicago).\n\n[https://commercial.century21.com/listing/6251-north-mccormick-boulevard-c-chicago-il-60659-REN017142293](https://commercial.century21.com/listing/6251-north-mccormick-boulevard-c-chicago-il-60659-REN017142293)\n\n[https://commercial.century21.com/listing/3711-west-columbus-avenue-chicago-il-60652-REN017304670](https://commercial.century21.com/listing/3711-west-columbus-avenue-chicago-il-60652-REN017304670)\n\n[https://commercial.century21.com/listing/5936-north-milwaukee-avenue-chicago-il-60646-REN014712128](https://commercial.century21.com/listing/5936-north-milwaukee-avenue-chicago-il-60646-REN014712128)\n\n[https://commercial.century21.com/listing/5625-south-western-avenue-south-chicago-il-60636-C2182560719](https://commercial.century21.com/listing/5625-south-western-avenue-south-chicago-il-60636-C2182560719)\n\n[https://commercial.century21.com/listing/9301-south-halsted-street-chicago-il-60620-REN016843002](https://commercial.century21.com/listing/9301-south-halsted-street-chicago-il-60620-REN016843002)\n\n[https://commercial.century21.com/listing/151-north-cicero-avenue-chicago-il-60644-REN015957962](https://commercial.century21.com/listing/151-north-cicero-avenue-chicago-il-60644-REN015957962)\n\n*(I can do this all day...it really doesn't require much effort at all).*", "replies": [{"id": "h9f6ye1", "text": "Apparently you should look up the definition of CBD (with particular emphasis on the \u201cC\u201d). None of those are remotely close to downtown\u2026", "replies": [{"id": "h9f7auv", "text": "Apparently you should look up the part where I said:   \"*Nearly every large metro in the country other than NY or Chicago*\".", "replies": [{"id": "h9f7nz4", "text": "That\u2019s true but you tried to bust out a bunch of listings which even a cursory review will tell you that they are very much not within a CBD.", "replies": [{"id": "h9f9c3j", "text": "That's because I had already clearly stated that (perhaps a third time will be more conclusive for you):   Available in.....\"*Nearly every large metro in the country (here's the key phrase you should be looking for....here it comes....)* ***other than*** *NY or Chicago\".*\n\nIf I wanted to take the time (which I don't) I could very likely find (in the Chicago CBD....which I am more than well aware stands for \"Commercial / Central Business District\") at least one, and very likely several places that meet the defined criteria.\n\nHowever, I already acknowledged that for NY, and Chicago, that I didn't feel it would be likely.\n\nPerhaps I should also state that I don't think it would be likely to find such a thing in Miami, or San Diego too?\n\nBut, having purchased real estate in major metro areas for 30 years...I can assure you....this product can be found.\n\n(Even in Chicago).\n\nIt may be a shit hole.  It may need work.  It may have encumbrances.  It may even be a terrible drug infested rats nest.\n\nBut it can most assuredly.....be found.", "replies": [{"id": "h9f9w5c", "text": "CBD means central business district, as in centrally-located. IDK what podunk towns you invest in but I assure you that you cannot find a free-standing retail building with drive-thru and parking for $700,000 in Chicago\u2019s central business district. Not in this decade at least.", "replies": [], "depth": 11}, {"id": "h9fam2n", "text": "Nice ninja Edit on commercial btw", "replies": [{"id": "h9fawx7", "text": "It wasn't intended that way....I'm old and I spaced.", "replies": [], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h9drgye", "text": "Negotiating some tennant paid improvements and rents escalations into the lease could help sweater the deal with the landlord. \nAlso right now the landlord is still getting paid late by the tenant so they aren't desperate to get a new tenant. Talking to the Thai restaurant about their plans on relocating could give you another deal and motivate the landlord to rent or sell at a lower price.", "replies": [], "depth": 1}, {"id": "h9eipzi", "text": "You need to run the numbers from the landlords side and see what the rate of return is", "replies": [{"id": "h9enp20", "text": "Yeah, you could honestly probably call the owners of the restaurant and ask what they pay and tell them you may be able to find a better deal for them.", "replies": [], "depth": 2}], "depth": 1}, {"id": "h9enght", "text": "First of all, your client should pony up and make a bigger offer to Buy. Do the analysis, but I'd guess cost of ownership will be lower than lease expense over term of lease, but I'm not running the numbers for you.\n\nSecondly, if you go the lease route just give the Landlord your final offer and just say \"look you can get this prime long term lease which is undoubtedly more than your current tenant is paying, or you can keep your shitty Tenant and watch your returns and property diminish as they clearly have. Your call boss, but I need an answer or we'll move to the next site.\" Then just leave. Let him sit on it, he'll come around or he won't but the more you pester him the more desperate you seem and the more bargaining power the LL has.", "replies": [], "depth": 1}, {"id": "h9sfsms", "text": "It seems your client is not willing to pay for the parking but wants a parking lot for free. That's the lever to bring down the client.\n\nLate payments of rent, property is decreasing in value every year, upkeep/maintenance costs are climbing up.  LL levers\n\nStructure the deal accordingly.", "replies": [], "depth": 1}]