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 18May 2015