CREJ - Retail Properties Quarterly - May 2015
We have seen an explosion of restaurant and bar projects throughout Colorado over the last couple of years – in 2014, there were over 300 openings in the Denver metro area alone. This flurry of activity is carrying over into 2015 with dozens of openings each month. With so much activity and competition, the food service industry is finding new ways to attract customers. One way is to find and create a unique space to match their imaginative menus. Foodies are flocking to Lower Highlands and River North Art District, but other neighborhoods with nontraditional buildings also are in demand – the standard retail space doesn’t always fit the bill for the trendy and fresh concepts. Regardless of location, these unique spaces come with challenges, and the significant cost of not properly anticipating these obstacles can cripple or kill a project. Our experience shows that no amount of research and review is too much, and the earlier in the project challenges are found and resolved, the better. The most significant challenges in the adaptive reuse or urban renewal of older buildings are the ramifications of a change of use and a change of occupancy in the zoning and building codes. In the city of Denver, these changes trigger a series of requirements that, while standard for new site development, must be incorporated into the design. Questions must be asked and answered – does the current zoning allow the proposed use and what neighborhood review and approval might be necessary; does the change create new parking requirements and what exceptions or reductions can be utilized; what barriers exist that prevent compliance with accessibility requirements; can the site accommodate the ever-popular outdoor dining area, whether on the ground or the roof? In addition to the site, the building itself must be adapted to accommodate new use and occupancy. The evaluations of the superstructure and life-safety requirements are just as critical as the space plan and branding. In addition to having a sound roof and walls, the floor structure must be evaluated for loadcarrying capacity for restaurant use. Often we find the need for additional joists, beams and columns in crawl spaces and basements. Masonry walls require repair and tuck-pointing, as well as reinforcing due to age. Roof structures often are significantly underdesigned for proper snowloading requirements. Frequently, we see the need to add fire sprinklers in a building. In a change-of-use situation, the building code requires the installation of a fire suppression system when the occupant load reaches 100 or more, or roughly 1,500 square feet of dining area (even less for a bar or tavern use). Additional exits with minimum separation are required for assembly occupancies. In the case of a mixed-use building, one must know the fire-rated separations required in the walls, floors and ceilings between dissimilar uses. Beyond the site and the building, the infrastructure must accommodate a specialty user. Heating, ventilating and air-conditioning systems in older buildings or previously used spaces likely will not conform to the current mechanical code requirements for occupant counts, necessary fresh air changes and newly added kitchen exhaust hoods. Electrical services to the building may be undersized and require upgrade or modernization. Utility company installations of upgraded transformers and service entrances recently delayed project schedules and openings. Most food-service uses must include a grease interceptor. While some menus may allow for a variance, there are sanitation districts along the Front Range that require grease interceptors regardless of the food that is prepared and served. One of the most critical and difficult challenges for a restaurant project is the water service. Will there be enough flow and pressure provided by the utility? Will the water service need to be upsized to meet the new demand? Keep in mind that tap-anduse fees can exceed six figures. Many of the new restaurant and bar concepts are owned and operated by families and chefs who are new to the development and construction of a restaurant space. They know their culinary craft and they know their business, but they may not know what to expect when building out a new space. The family’s life savings might be on the line. If a new location is a second or third opening, the owners still have to manage their current business and may not have the bandwidth to manage a new project. There are many tasks to undertake and vendors to coordinate with, such as food and beverage suppliers, furniture suppliers and equipment installers, each with moving parts that must be attended to. The vendors, designers and consultants must possess experience in the food service industry to help clear a path to successful project completion. Proper project management, more so in food service projects than in other uses, is critical to bring the team together. The growth of restaurants and bars likely will continue, as these tenants provide a service and experience that cannot be replicated or replaced by the e-commerce marketplace. The competition for customer attention and retention continues to grow, forcing food-service concepts to become more unique and specialized, which adds to the challenge of finding the right space. As prime locations are taken, remaining spaces will bring another level of obstacles to overcome. While restaurants often are folded into the retail world, their uses necessitate proper evaluation and execution by the right team far beyond that of a typical retail user.