1 / 32 Next Page
Information
Show Menu
1 / 32 Next Page
Page Background Fast-casual franchises spark the retail real estate market

INSIDE

by Ryan Gager

The continuation of a strong mar-

ket since the Great Recession has

given the workforce flexibility with

their money and, in general, they

have been able to earn and save

more. Now people are looking for

investment opportunities in order to

make a return on their money. Fast-

casual restaurants are providing the

opportunity and many have jumped

on board.

“People are more comfortable

moneywise than they have been in

several years,” said Matthew DeBar-

tolomeis, vice president of brokerage

and retail services with CBRE. “I have

seen the franchise business grow

tremendously as people look to it as

an investment opportunity.”

Fast-casual is a type of restaurant

that does not offer full table ser-

vice, but promises higher-quality

food with fewer frozen or processed

ingredients than a fast-food restau-

rant. Colorado, and especially the

Denver metro area, is becoming a

hotbed for these restaurants.

“Red Robin, Smashburger, Noodles

& Co., Chipotle and Einstein Bagels

are all Colorado-based companies,”

said Matthew Henrichs, vice presi-

dent of investment properties with

CBRE. “Colorado has been a prov-

ing ground for fast-casual growth

concepts. Their success continues to

drive demand from other concepts

in the sector.”

Another reason franchising has

been so successful is because it

favors all parties involved – the

franchisor, the franchisee and the

shopping center. For example, rather

than opening up a burger shop,

someone may put his money into

opening up a Smashburger. “That

way, he has franchise rights to a geo-

graphic location area, and is able to

use their formula and programing,”

said DeBartolomeis. “The landlord

is also excited about welcoming in

franchise tenants because of brand-

name recognition and financial sta-

bility.”

The fast-casual franchise model

is helping drive the retail business

right now. Shopping center owners

and their brokers easily are leasing

small-shop space to fast-casual ten-

ants, which lifts up occupancy. The

name-brand tenants also are willing

to pay more in rent, giving the land-

lord options to better reposition the

shopping center and upgrade ten-

ancy. Of course, this scenario could

come at a price, as name-brand fast-

casual restaurants may start driving

out local unchained tenants who do

not generate high profits and, there-

fore, are unable to pay the higher

rents. DeBartolomeis said he has not

seen much of this happening cur-

rently, but it might be something to

watch out for going forward. Accord-

ing to statistics from CBRE, over half

of those who are actively looking for

retail space in the market are fran-

chise driven.

Jersey Mike’s Subs is a fast-casual

franchise that is having its biggest

year in Colorado, with 13 stores that

are open or will be opening this year.

Jason Brown is Jersey Mike’s Subs’

area director for Colorado and said

that there are a variety of factors

Northern and southern submarkets report strong growth this year. Submarket reports PAGE 6 Light-rail expansion could lead to changes in the future of retail. Urban consumers PAGE 22 Retail space challenges are met with creative solutions from restaurants. Restaurant trends PAGE 16 Please see Page 18

May 2015