200 Chipotles Are Coming
Our headline may have been the title of a dream you had. But it's also a reality. At our Bisnow Retail Real Estate Summit, held Tuesday in Santa Monica, the city's top developers revealed what's in store for retail.
Chipotle Western region development director Sam Saul says the company's taking all kinds of sites, at all income levels, to keep up its heady growth. The goal is to open 200 domestic locations per year, all of which are company-owned. You can find Chipotle on college campuses, at airports, and in power, lifestyle, and strip centers. (And if you eat one late at night, in your dreams.)
S.D. Deacon director of preconstruction Jan Cenedella says the company puts on a Survivors Dinner at the ICSC conference in Vegas to see who's still standing. As the group has grown, she notes, they've survived because of discipline: making the right deals and partnering with companies that make smart decisions and employ smart people.
Regency Centers managing director-West Mac Chandler says the company wants sophisticated retailers who aren't afraid of the Internet, whether it's for social media, distribution, or service. Regency takes its time to handpick small, local tenants, looking less at credit and more at operating know-how. A $2,000/SF or $3,000/SF restaurant can change the dynamic of a shopping center.
LA is full of interesting opportunities that aren't obvious, according to The Jerde Partnership senior design partner Tammy McKerrow—from subpockets scattered between established destinations, to the little corner that has a great space between buildings or a surface on which to show movies. She pointed to a site in Hollywood (across the street from Roscoe's House of Chicken and Waffles) where, amid existing buildings, there's some new infill going in.
NewMark Merrill Cos president Sandy Sigal notes that six years ago, most landlords didn't collect tenants' sales info except for percentage rent purposes. His company has always collected and analyzed the info to right-size rents and find out who's successful. Additionally, if you can use multiple marketing channels (including positive Yelp reviews) to turn a retailer that has a one-mile radius into a retailer with a two- or three-mile radius, its ability to pay more rent will go up dramatically.
As a tenant that came through the recession, Sam described how Chipotle's relationship with landlords changed: "We're probably a little bit nicer now—we cut a lot of great deals." Mac says Regency's ground-up development leans toward grocery-anchored centers in first-ring affluent suburbs. Sandy says NewMark also focuses on helping existing tenants promote themselves. In contrast with office and industrial, he notes, with retail "you're partners with your tenants whether you like it or not." McKenna Long & Aldridge partner Michael Udell, right, was our moderator.
We couldn't put on programs without our sponsors. Preferred Paving Co, whose project manager/estimator John Calderson we snapped here, is a full-service asphalt company based in Orange County.
Given California's ongoing drought conditions, Five Star Turf Commecial's Robert Groot (right, with colleague Nick Basile) says there's tremendous demand for the company's artificial turf products. Customers range from commercial properties, hotels, and retail to municipalities. The company offers more than two dozen varieties.
We took this of Tyler Kim and Brian Wallace of Downtown Long Beach Associates, which is both a BID and a property-based improvement district. Tyler tells us they're seeing a lot of new investors purchasing commercial buildings, as well as construction of new residential buildings.
Dynamic Development Co's Ryan Flanagan, with colleague Morgan Christiansen, says the company looks for properties to develop or reposition for retailers, putting them into its portfolio but will also consider offers to sell. Current projects include two 7-Eleven strip centers in SoCal and a Jo-Ann Fabrics in San Diego, with a number of projects in NorCal as well.