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February 2015 — Retail Properties Quarterly — Page 19
L ast year, Denver welcomed
approximately 300 new restau-
rants into the Denver metro
area, and about 200, or maybe
even more, are expected to
open their kitchens in 2015. Needless
to say, metro area diners have plenty
of cuisines, neighborhoods and price
points fromwhich to choose. And
before you begin to feel “stuffed,” there
are a lot of exciting new culinary ideas,
ventures and trends that will keep you
coming back for more.
One of the more interesting things
occurring with small, chef-driven
restaurants is the preference toward
smaller spaces.These independents
are more than happy to locate in a very
intimate setting (2,000 to 4,000 square
feet) and provide superior service and
unique recipes to smaller groups of
patrons. In addition to a small space,
they are increasingly seeking locations
that are tucked-away, and sometimes
challenging to find, as long as they’re in
an urban setting. For these rebel chefs,
being somewhat of a mystery – in an
offbeat location – adds to the aura of
their image, enhances the custom-
ers’ experience and, some might say,
makes themmore in demand.
Perhaps people enjoy a sense of dis-
covery and, for many serious foodies,
the more unusual the trek to get a great
meal, the more fun. As a result, small
restauranteurs are on the hunt for the
proverbial “hole-in-the-wall.” Some of
their target areas in Denver include old,
traditional neighborhoods where small
vintage buildings have been renovated
(and have been home to the neighbor-
hood tailor, barber or bar for countless
years). Another surprising location that
is in high demand is in the city’s old,
industrial zones (River North is a prime
example), where a
restaurant might
set up shop next to
a cement plant or a
secluded art gallery.
The many Denver
neighborhoods that
haven’t yet reached
their full potential
in regard to develop-
ment (Jefferson Park
and Five Points are
two examples) also
are beginning to get
a lot of attention
from chefs with a “build it and they will
come” approach.
The fundamental “rules of retail”
have shifted for these culinary entre-
preneurs.They do not require locations
with the most auto and pedestrian traf-
fic or highest incomes. And if they pro-
vide value, quality and are in step with
contemporary trends and décor, people
will find them. As an added benefit to
their willingness to alter the rules of
the game, they can obtain more afford-
able lease rates at the lesser-known
commercial addresses that will help
them to stay in the game long term.
This trend might concern the land-
lords of larger metro-area projects,
but never fear, as many larger, multi-
unit operators’ restaurants still want
demand-only real estate.These restau-
rants understand that their customer
base knows and appreciates their qual-
ity, consistency and service level, and
will keep coming back for good food
and added convenience. It’s for this
reason that the franchises want to be
located in shopping malls and centers,
along busy streets and in areas with
great visibility.They often want large
footprints (4,500 to 7,000 sf) so they can
generate substantial volume and return
on their investment.
Major, well-funded restaurant groups,
particularly from other markets, are
willing to pay top dollar for A loca-
tions, provided that they include the
complete restaurant infrastructure
and $100 per sf toward the build-out
of the restaurant.These contributions
often are in excess for larger restaurant
groups.Their brand and reputation are
already well known, highly respected
and reliable for giving their customers
exactly the experience they want.The
landlords who can accommodate this
formula for success likely will enjoy
the value of having a strong restaurant-
anchor tenant or tenants on their prop-
erty for a long time.
In between the indie chefs and the
large sit-down restaurants, there are
numerous fast-casual restaurants,
which continue to expand throughout
the metro area. Customer favorites,
such as Smashburger, Qdoba, Panera
Bread, Modmarket, Potbelly, Noodles &
Co., Einstein Bros., Hop Doddy, Chipotle
and Dunkin’ Donuts, are competing for
new locations across the Front Range.
They also have “prime” site criteria,
and generally require 2,400 to 3,000 sf
in order to serve their customers. In
addition to new locations, this category
of restaurants is actively updating the
décor and design of their space.They
want to appeal to a younger contempo-
rary customer base, in addition to their
base demographic, and stand apart
from the competition.
If you’re building up an appetite, the
metro area’s restaurant scene is as
active as it has ever been and we are
the beneficiaries.s
Restaurant Update
Kelly Greene
President, Urban
Legend Retail
Group, Denver
The preference for chef-driven restaurants is toward smaller spaces.