Deal of the Week: Location Helps This Retail Property Fetch Full Asking Price

A TGI Friday’s franchise location in Tallahassee, Florida, last Friday fetched the full asking price of $3.25 million after just six months on the market.

The property drew a lot of interest when it went on the market, a prime example how a good location can attract potential buyers. With restaurants, location is vital for drawing in customers. They need good visibility and access to a lot of traffic.

This property sits just off Interstate 10 along one of the city's major thoroughfares in a retail heavy area that includes hotels and businesses. In a 3-mile radius, there are more than 42,000 people with an average annual household income that tops $89,000.

Often, deals involving a brand-name establishment like TGI Friday's would focus on the ground beneath. The new owners would buy the land and lease the property on top back to the operator in an arrangement known as a net lease, where the tenant typically covers the property taxes, insurance and most maintenance and just sends a rent check for the land.

In this case, the sellers, John and Judy Henderson and Alan and Donna Raydo, decided to end their long run after 24 years at the location. They are planning to close the doors on July 29.

“It was time for us,” Henderson told the Tallahassee Democrat. He has a more than 40-year history with TGI Fridays that includes a dozen years serving in the corporate office.

So they decided to sell the real estate. Walk On’s Bistreaux & Bar, a Baton Rouge, Louisiana-based Cajun-themed sports bar, bought the property and plans to put one of its restaurants in its place, confirmed Barry Wolfe, a retail broker with Marcus & Millichap in Fort Lauderdale who listed the property. New Orleans Saints quarterback Drew Brees has been a co-owner in the 16-year-old company since 2015.

Wolfe said the property was marketed as a vacant building and had a “bunch of offers on the deal, more than a dozen.” Some of the offers were below the asking price, he said, because the would-be buyers wanted to tear down the building and build new. The owners held out and settled on Walk On’s as the most viable one to close the sale at the price they wanted.

Walk On's sought to be in Tallahassee, Wolfe said, and put the property under contract in February. The chain then had to work through the city on plans and permits.

Walk On’s, which was founded 16 years ago by two walk-on basketball players at Louisiana State University, has 28 locations around the southeast, mostly in Louisiana and Texas. It has plans for another dozen, including the Tallahassee location.

As a chain, TGI Friday’s has struggled to compete with fast-casual competitors. But the Tallahassee location was successful and had a loyal following, Wolfe said.

“So Walk-On’s should do fine there,” he said. “They likely will inherit their customer base.”

LoopNet publishes new "Deals of the Week" every other Monday. Click here for the entire series.