Two restaurant openings this week are prime examples of how commercial landlords are increasingly willing to cut deals with tenants if they don’t have to dump money into their buildings for renovations, says Mark Hebert of Kurz & Hebert Commercial Real Estate.
“A lot of landlords either don’t have the money or don’t want to borrow it. So if you have a retailer or restaurant that’s willing to invest their own money on improvements, they’re getting in the properties and they’re getting pretty good deals,” Hebert says.
Such was the case for the new Applebee’s at Perkins Rowe and the Sante Fe Cattle Co. in Prairieville’s Ultima Plaza (in the space formerly occupied by Red Stick Bistro), both of which opened this week.
“Applebee’s did 100% of the build-out for a favorable rent deal and some free rent. Sante Fe did the same. I don’t know if those deals would have gotten done otherwise,” Hebert says.
While Hebert still gets calls from prospective franchises that want the landlord to invest $20- to $30-per-square-foot on renovations before signing a lease, Hebert says fewer of those deals are getting done these days.
Maestri-Murrell Real Estate Agent/Broker Jonathan Walker says, “Almost all of our deals now involve a substantially high amount of reduced or free rent in exchange for build-out costs.”
That’s not only the case for retail spaces, Walker says, but for offices, too.
“A few years ago, whether it was retail or office, tenants were pretty good at getting quite a bit—if not all—of the build-out paid for by landlords,” he says. “Of course, location determines a lot of this, but that’s not really the case anymore.”
