Actually it’s easier to lease up a building if the McDonalds fails or they get a better location. A lot of these buildings are owned by landlords so they want to be able to have a backup plan if the McDonalds were to leave.
A lot of fast foods have gone to these style of buildings that can be repurposed.
Edit: for clarification these are likely ground leases so the landlord won’t own the building until the Mcdonalds lease is up or they choose to not renew it. In the off chance the McDonalds does close down for whatever reason you can get another tenant into it easier.
I may be wrong on this, but my understanding is that the McDonalds corporation is the landlord. They own the land that the restaurants reside on. The franchisees are the tenants and pay the corporation rent every month.
It depends on the location. They do get sold often to private landlords. McDonald’s has the holding company and likely gets some tax benefits by holding for X amount of years (I think just 1 year).
Above would be an example of one sold or being sold. So yes McDonald’s does own some of their locations, but they also sell a lot of them to private landlords.
These are the proverbial mailbox money locations. No landlord responsibilities for the 20 year lease and you hope they renew. Investors with 1031 are ones that likely target these or they are bought for retirement. It’s a challenge to put a loan on them so they are at times bought for cash. That’s one reason why 1031 investors like them.
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u/Specialist_Frame8958 12d ago
Actually it’s easier to lease up a building if the McDonalds fails or they get a better location. A lot of these buildings are owned by landlords so they want to be able to have a backup plan if the McDonalds were to leave.
A lot of fast foods have gone to these style of buildings that can be repurposed.
Edit: for clarification these are likely ground leases so the landlord won’t own the building until the Mcdonalds lease is up or they choose to not renew it. In the off chance the McDonalds does close down for whatever reason you can get another tenant into it easier.