The Woodmont Company, a national retail real estate company specializing in brokerage, development, investment and property management, recently hired 30-year retail real estate veteran Emily Iseminger as SVP of brokerage services, based in the firm’s Newport Beach, California, office. Iseminger will specialize in working with West Coast retailers and restaurants on their real estate needs.
Iseminger has represented some of the country’s premier retail and restaurant brands, overseeing leasing and development from conception to completion, including traffic studies, pre-construction, zoning, variance, parcel map applications, planning of development sites, and layout of shop space. SoCal Real Estate asked her about the Orange County market’s restaurant sector.
“The special needs for drive-thru restaurants in Orange County and other areas are time, time, and more time,” Iseminger says. “Cities are requiring much longer periods of time than even five years ago. Parking studies, neighborhood groups approval, etc., are coming up more often and have to be resolved prior to the conditional use permit (CUP) submittal.” She adds that most cities will not allow plans into plan check before the CUP is issued, which adds months to the entire process.
Special needs for quick-serve restaurants (QSR) are patio space in the design of the building, Iseminger says. “Patio space drives sales, and higher sales increases the rent that the tenant is willing to pay.”
From the retail real estate owner’s perspective, landlords would be wise to create new pads and tear down or remodel old pad buildings to create a QSR food court or drive-thru pads. “The demand for either use is not keeping up with available sites,” Iseminger says. “High rents and low cap rates are the reward for the landlords.” She adds that landlords should realize that every day a restaurant is not open, it is losing money; therefore, restaurant tenants want their eateries open ASAP.
Regarding lease terms and negotiations, restaurant tenants do not view these differently from other retail tenants since delayed rent, exclusive use, and caps on NNNs are universal. “The difference is for the time needed to gain permits from use to building,” Iseminger says. “Landlords that are building new centers are getting CUPs for the proposed drive-thru pads during their shopping-center site-plan approval, enabling tenants to open much faster.”
Meanwhile, new concepts are being conceived and built at a very quick pace, she adds. “The fusion of different types of food and international flavors is really exciting, as well as organic and diet-restricted foods. These concepts are coming quickly to Orange County. The restaurant industry here is becoming very cutting edge in the QSR segment. You will see the older full-service chains either close or not build anymore locations. A closed full-service restaurant is now becoming a multiple QSR collection of tenants.”