Have a question about an out of the box leasing assignment - Retail space inside a gas station
Hi Everyone, I'm a commercial real estate broker, in the business about 4 years now in CT. I'm wondering if anyone's ever done a deal like this where you put like a Subway or Dunkin Donuts in a small square footage space inside a gas station? The owner used to have a Subway in the space but it's not performing well and their rent was based on sales so she's deciding not to renew their lease. Subway would give her a rent check for anywhere from $1,900 - $2,900 every month. She'd rather get a flat rate from a new tenant. It's only a 400 sf space and she wants $3,600 per month. No one in my office has done a deal like this and unsure how to proceed. If anyone has any experience or expertise with a deal like this some advice would be greatly appreciated. Thanks!
[{"id": "d18cepf", "text": "My first thought would be to ask the owner/landlord for a copy of the current lease, to get an idea how it's structured. I'm guessing it was drafted by an attorney for Subway as they do lots of these types of locations. You'll want to advise the landlord to have a good attorney to draw up the next lease, probably modeled mostly on the current one with the exception of changing the sales-based rent to a flat (gross?) rent. It doesn't seem too difficult. A lot of the definitions in the current lease should help. I'm sure it includes things like shared parking, what can be sold, etc.", "replies": [], "depth": 1}, {"id": "d18f9k8", "text": "Is the $3600 based on anything?  I'm curious how she came up with that.  Were the gross sales for subway less than previous tenants?  How are her gross sales compared to close by gas stations?  This strikes me as the type of thing where if sales are low it may be her problem more than theirs.  Just general thoughts, I don't do that type of brokerage so I may be way off.", "replies": [], "depth": 1}, {"id": "d1cot9n", "text": "Hmm Subway is a strong tenant, the grass is always greener and letting them go may be a mistake. My guess is your unsophisticated seller is off the mark by expecting $3,600. As mentioned below, read the lease to better understand the sale breakpoint and the year-to-year sales which is likely reported (amongst other things). PM me if you want to discuss further, I've worked on a few c-store deals.  ", "replies": [], "depth": 1}]