Demand for westside restaurants doubled in 1st quarter
It's A Landlord and Seller's Market
by Ira Spilky
Published in On Premise West, Aug/Sept 2001
Southern California's Westside corridor is experiencing its biggest compression factor in years, as demand far exceeds the supply of existing prime location opportunities in high-profile and entertainment venues.
The supply is so scarce, there are over double the amount of inquiries currently on the market as there are available locations. New players from throughout the world add to the focus, as the Westside comprises the ideal composition of demographics mixed with discretionary income.
Historically, the first quarter has been associated with restaurant closures. The shake out has not occurred in January/February 2001 on the Westside. Either assets are being sold or cash flow is coming in, but restaurants are not closing and there is a non-existence of turnover.
Compounding the compression factor is that renovation and shopping center construction momentum has slowed down.
The need for recycled conversions is excessive. The restaurateur looking for existing space from Brentwood, Santa Monica, Malibu and West Los Angeles will be forced to wait in line for the perfect fit. The luxury of finding a location with assets intact, entitlements approved, existing conditional-use permits, environmental reports and a coded parking lot is absent.
Consumer confidence is so high, the average casual or high profile restaurant in this area is recession-proof, depending on the restaurant's average ticket and its developed brand identity. The success of developing a three-mile radius of customers is a winning formula for neighborhood repeat customers, and the Westside is primarily supporting, although many dining locations are also destination spots because of reputation.
The solution may be the phenomenon of the redeveloping urban villages. Suburbia was formerly the blooming retain haven, but with the triumph of Santa Monica's Third Street Promenade, San Diego's Gas Lamp Quarter, and the urbanization of Irvine, Valencia, and Glendale, the cities are here to stay and grow.
Similar to the metamorphose of New York's Time Square, Hollywood is readying itself for a conversion of astounding proportion led by such prestigious developers as Trizec-Hahn, Regent Properties and the CIM Group. In progress are Hollywood/Highland, Hollywood/Orange, Sunset/Vine, Cinerama Dome and Pacific Theater retail and entertainment center projects.
The factor or time-management emphasizes the importance of urban development, with people desiring a more compact lifestyle. The "residence on top, retail on bottom" approach to development is new to our communities, but mimics east coast cities.
"Location, location, location" continues to be the mantra of the real estate world, but successful restaurants (independent or chain-owned) in their niche are committed and have achieved excellence in their back to basic approach to exceed guest expectations. They have projected a statement, a signature, and a brand that sets them apart from their competition. They have reached a balance between food quality and perceived (real) value. Their management and employees radiate "guest-driven" service. Ownership is open to reinventing themselves and adapting to change, with a passion for the business.
True, some locations should never have housed restaurants, but if the Westside is not an option due to unavailability, here are some up-and-coming prime Southern California predicted to endure"
South Bay, Burbank/Glendale/Pasadena, Studio City, Woodland Hills, Thousand Oaks, Westlake Village, Valencia, Ventura, Rancho Cucamonga, Temecula, Ontario, Montclair, Claremont, Newport Beach, Irvine, Costa Mesa, Huntington Beach, San Clemente, Carlsbad, Encinitas and Mission Valley.
There are available opportunities in these areas. Work with a knowledgeable, experienced restaurant broker to find targeted, focused opportunities to perform the due diligence and discover where the opportunities really are.
Ira Spilky can be reached at 310-558-3241. Email address firstname.lastname@example.org.