Aspiring restaurateurs in Colorado Springs will likely have to wait in line.
Local real estate experts say restaurant-ready properties are scarce and — without additional construction — the supply will only get thinner.
“I get three to four calls a day,” said Whitney Johnson, an associate at CBRE, a local commercial real estate company. “Space is really hard to find.”
Second-generation restaurant spaces, especially in buildings with fewer than 2,500 square feet, are the hardest to come by, she said. That includes quick-service restaurant spaces between 1,200 and 1,800 square feet, which are in the shortest supply, she said.
While the northern portion of town, on average, is commanding the highest-priced leases, starting at about $25 a square foot plus triple net (utilities and other maintenance costs), Johnson said areas with the most available spaces border the Citadel Mall at Academy Boulevard and East Platte Avenue.
Amanda Miller Luciano, a broker-associate with Synergy Realty Group, is working to find usable restaurant space for several tenants, from locals to national chains.
“What we’ve had to start doing is looking for spaces we can turn into restaurant spaces,” she said. “That’s really expensive. Pretty much anywhere will require you to have a grease trap. If it’s not new construction, there isn’t going to be a communal grease trap, which a lot of new construction puts in, so new restaurants can tap into it. That’s a significant cost savings — $7,000 if you’re lucky, $20,000 if you’re not.”
It’s the same story for Tiffany Colvert, a retail and commercial real estate broker with NAI Highland who specializes in restaurant real estate.
“Move-in-ready restaurant space is quite limited,” Colvert said. “When a space comes onto the market that already has a grease trap, a [ventilation] hood, a walk-in cooler — those get snatched up right away because it reduces the tenant’s upfront costs dramatically.”
Costs to renovate existing spaces can easily reach and sometimes exceed $150,000, Colvert said, adding that of the 30 percent of her clients looking for available commercial space, 90 percent are waiting to open a restaurant.
About half are national brands, some of which are bringing tested concepts from bigger markets like Denver, but expanding in Colorado Springs because of more affordable real estate.
Denver’s pricey market has pushed potential restaurateurs south, Johnson said.
“A lot of people are looking at tertiary markets like the Springs,” she said. “Prices are high but more affordable.”
But being more affordable doesn’t necessarily mean cheap.
Miller Luciano said properties within the most popular retail centers — such as University Village on North Nevada Avenue — are going for about $50 per square foot triple net, a price point that is likely too restrictive for many local, self-funded restaurateurs. She said new construction in Briargate is demanding similar rates.
Fountain’s recently annexed South Academy Highlands retail center, home to a Sam’s Club and Walmart Supercenter near Fort Carson, is commanding leases in the $40-per-square-foot range, according to Colvert.
She said grocery-anchored retail centers are often in highest demand, especially for national chains.
“Often for national chains, their criteria means they won’t even look at a center if it’s not anchored,” she said.
“They like the traffic and stability. We see those fill fastest.”
Miller Luciano said national chains chase anchored space because they are hindered less by the cost of building out those properties.
“It’s easier when you have higher buying power and can afford more per square foot,” she said. “But even if the space was restaurant-ready, [buyers] would still have to spend a lot of money to make it into their concept.”
Tenants building out commercial space shouldn’t hesitate to ask the landlord for free rent while construction is taking place, Miller Luciano said.
“That’s a minimum concession you should expect from a landlord if you’re improving his property,” she said.
Paul Lastrella found the only way he could open Sushi Ring III near Research Parkway and Powers Boulevard was to modify existing infrastructure.
He is waiting for his regional building permit to start construction on a former painting and wine business. Lastrella will then spend a “very conservative” $90,000 out of pocket to put in a kitchen and bar.
He would not disclose any incentives offered by his landlord, but said the landlord provided financial reasons to choose the location.
“I needed help building and, whether I stay there or not, he now has restaurant space,” he said. “That’s useful for the landlord.”
Lastrella is also co-owner of the 1,500-square-foot Sushi Ring II, located at Eighth and Cimarron streets. He said he’ll pay twice as much per square foot for the new 1,900-square-foot space.
The higher rates in northeastern Colorado Springs were a concern, but he’ll be tapping into a strong following from that part of town, he said.
“I have a lot of customers up north,” he said. “I’m just bringing the restaurant to them.”
Restaurant space is leading the demand in retail — a trend that Colvert said is on the rise as more retail operations, such as electronics and clothing, move operations online.
That leaves more space for eateries, fitness centers and beauty salons, operations that can’t service customers virtually.
New existing rooftops or residential construction is in the works to support an explosion of restaurants in developing areas, such as Polaris Pointe near North Gate Boulevard and I-25, or areas marked for redevelopment, such as South Nevada Avenue.
“You’re seeing redevelopment along Academy Boulevard creeping south,” Colvert said.
“It used to be [that] a retailer wouldn’t look south of Austin Bluffs [Parkway] — some wouldn’t look south of Woodmen [Road].”
That’s no longer the case.
She’s talking with a national chain that has shown interest in leasing space near North Carefree Circle and Academy Boulevard, an area that in recent years has been difficult to fill.
Colorado Springs, compared to the rest of the Front Range, is not likely to experience a development bubble when it comes to restaurants, she said.
“The nice thing about Colorado Springs is, we’ve not grown as quickly as Denver, so I think we have a more stable market,” she said.
“We’re ranked very highly as a place to live, so I think [restaurateurs] are looking at the Springs more seriously.”
|Retail Spaces||Restaurants||Restaurant % of Total Retail|
|Colorado Springs||3,533||276||7.8 percent|
|Castle Rock||264||35||13.2 percent|