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Food halls bring opportunities to smaller communities INSIDE Capital returns to retail assets as investors cautiously view a post-pandemic future Investment market Medical spas are becoming more common; here’s what to know about these future tenants Tenant trends PAGE 26 Retail plays a powerful role in reinvigorating communities, as seen in Five Points and RiNo Owner insights PAGE 18 August 2021 PAGE 10 O pening a restaurant is always a challenging endeavor, especially with the uncertainty caused by the COVID-19 pandemic. Restaurant build-out costs often are a few hundred thousand dollars, putting restaurant ownership out of reach for many chefs looking to establish their first restaurant. This challenge is compounded in smaller communities like Pueblo, where the buildings are generally older, requir- ing an increased expense to convert the space into a restaurant. Further- more, landlords in smaller markets often lack the financial capacity to provide tenants with significant improvement allowances. Land- lords also may be hesitant to provide a large allowance even if they have the capacity to do so because lower market rents may not offset the upfront cost of the allowance. Given the greater challenges of opening restaurants in smaller markets, food halls can make con- siderable impacts in these commu- nities. A food hall can be scaled up or down to house an ideal number of restaurant spaces to support the economy. A prime example of this is the Warehouse Food Hall in Craig, population 9,022, which features three vendor spaces in addition to a central bar, fitting for a community of its size. While the economic models vary by food hall, in some situations, such as the future Fuel & Iron Food Hall in Pueblo, the food hall owner will build out the restaurant spaces and provide kitchen equip- ment. This reduces the expense on the restauranteurs to only cover signage, inventory, pre-opening labor and marketing costs averag- ing around $20,000, a much more approachable number than trying to open a brick-and-mortar restaurant. In smaller markets with reduced lender and investor pools, this can be the difference between chefs opening restaurants or abandoning Please see Page 27 Nathan Stern Assistant vice president, Broad Street Realty, and co-developer, Fuel & Iron Regular Architecture When a food hall owner covers most of the build-out costs and provides kitchen equipment, as is the case for the future Fuel & Iron Food Hall in Pueblo, restauranteurs have a much more approachable cost to getting a business started. In smaller markets with reduced lender and investor pools, this can be the difference between chefs opening restau- rants or abandoning their dreams.