When the Atlanta Braves announced their relocation to a suburban location, the City needed a new use for the 72-acre property. It was an opportunity to change the trajectory of an underserved part of town.

We got close to a boutique hotel deal, but COVID scuttled it. That deal or something similar will resurface when the debt markets settle down.

Reliable sales comps take a lot of work to come by. Yes, you can ask an operator, but an answer is neither likely nor reliable. A few ways to triangulate – form relationships with food vendors and alcohol distributors, ask other restaurateurs about their neighbors, talk to municipalities off the record, and, yes, brokers. Accountants specializing in food service businesses can help, giving broad intel without naming names. GMs, after they move locations, are some of the best sources.

A few ideas: joint venture where they contribute the property, master lease, or a lease assumption.

Check out my Substack post.

500-5,000 square feet.

When projected net operating income divided by total costs exceeds 8%, it starts to work, with the real upside being the halo effect on other properties.

It’s kind of like the Yogi Berra-ism “nobody goes there anymore. It’s too crowded." It’s always a bummer when the cool places get overrun by chains and the independents get priced out. The reason I’m such a proponent of using a broader perspective is that the money doesn’t have to be made off the backs of the restaurateurs but can instead be made off of increased desirability and density in the surroundings. Rents can remain affordable when the operator is paying in vibes.

Investors don’t care how the sausage is made, just how much they get. The trick is making a good enough deal on the land that allows the headroom to pay for details.

The tenant demand was strong out of the gate, with folks willing to invest their own capital in buildouts. In other projects, we’ve provided a lot (sometimes all) of the required improvements.

Anyone interested in buildings should read "A Pattern Language" (or better yet, the more intensive "Nature of Order" series). We’ve developed our own kit of parts for building these types of places. See this on patios, and we also have them on bars and buildings. Edens and Federal are both terrific operators and have used these ideas to create fabulous places. Union Market and Santana Row are wonderful examples.

No, I mean finding a handful of restaurants doing $3 million in sales each in the area or a comparable area.

This is where the comp of a few folks doing $3 million plus in revenue is important. If you can justify to yourself that in the immediate area or in a comparable area, an operator is doing more than 3 million in sales, that is the litmus test.

There’s an analogy with golf course development – build a terrific golf course, and the lots around it become more desirable. The course itself often loses money but (when it works) is more than made up for with the surrounding home sales. Same with ski resorts or a big fountain in front of an office building. So yes, consider the overall project, but we’ve been able to structure our projects such that the retail component is a profit center.

Get a job in the industry, working for someone specializing in retail and mixed-use properties. Spend time in leasing, property management, and finance, and get educated on construction.

Our gathering in October solves that problem, allowing building owners to meet quality operators and learn their language.

We’re seeing really nice shell buildings priced at $400 per square foot. TIs can range from zero to $300 per square foot.

There’s a lot of friction there – the best way is through personal shoe leather, walking in and talking to the owner. Our gathering in October removes the friction allowing building owners and developers (and aspiring developers) the opportunity to meet operators, form relationships, and learn how to approach them on their own.

Independent retail shops don’t require much tenant improvement; restaurants are a different story. We invest in great operators but didn’t have the opportunity to on this project.

Finding an area where existing operators are doing more than $3 million in sales is where to start. Then use that as a recruitment tool to build additional scale with new operators. The vertical commodity buildings come later.

They can play a role, but they’re not great at getting people to hang out and sit together. Also weather dependent.

We haven’t done much consulting. Our role is as a principal in our projects, either by ourselves or partnering with others. In this case, our partners at Carter did all the heavy lifting.

Three of the buildings were new; the others were heavy renovations.

It depends on what the operator needs. When we find someone with a halo, we work to solve for their needs.

We’ve been involved in large-scale re-entitlements, but partners managed it. I don’t have the stomach for it. Now we’re only involved in projects where communities reach out to us because they want what we do. I’ve lived in mountain towns and observed the unique culture. Because it’s universally appealing, there’s an opportunity to use the approach and product I encourage to make controversial projects more palatable.

The halo businesses don’t need to only be on the land you own (it’s better if they're spread around) but just in your immediate vicinity. The idea is to create enough critical mass of vibe to make a worthwhile destination.

We’ve done this, and it can be a powerful tool. Picking the right partners is the trick.

They don’t work if people can’t get there, but big parking lots kill vibes. Sidewalks, bike lanes, and mass transit all help and may be all that’s needed in certain areas, but there has to be a place to park them in car-dependent areas. In dense areas, that can be surrounding garages, but when it is surface lots, the lots should be secondary (in the back or otherwise tucked away). The best is a few small lots mixed with street parking.

The conflict comes when two operators are doing the same thing – two scoop ice cream shops next to each other doesn’t end well. There’s a benefit to clustering uses with different day parts – breakfast/brunch restaurants next to dinner & drinks or a juice shop next to a yoga studio.

Good idea – we’ll put it in the queue!

The math is like any other real estate development - solving for a return on cost. The difference with these types of projects is that there are more levers to pull that help get there – things like shared infrastructure costs, participation in surrounding development, percentage rents, municipal grants, and others. We’ll do a deeper dive in the future.