LOS ANGELES—Kennedy Wilson has completed three lease transactions with Jersey Mike's Subs in the greater Los Angeles area. The brokerage company has been hired to represent Jersey Mike's Subs in its Southern California expansion, which has already resulted in 25 new leases this year. Although these three leases only total 4,100 square feet, they illustrate the rise of fast-casual restaurants on the retail scene.
“The restaurant experience is changing quite dramatically from a retail perspective and as a shopping experience,” Michael Pakravan, VP of Kennedy Wilson's brokerage group tells GlobeSt.com. “Today, restaurants are the anchor tenants and people are going to retail destinations specifically for restaurants, whether that is a fast-casual experience or a sit down experience. Overall, people eat out a lot more. It used to be that you would eat out two to three meals a week, but millennials are now eating out two to three meals a day. When planning a shopping center or a mixed-use development, it is important to have both the fast-casual and the sit down restaurants to cater to different needs.” Pakravan represented Jersey Mike's Subs in the lease transactions.
These three leases are a few in a sea of new leases signed by the fast casual restaurant. Last year, it signed 200 leases nationwide, and this year it plans to sign another 60 in California. Once accomplished, the brand will have 1,000 locations nationwide, and they are specifically targeting L.A. markets, including Sherman Oaks, Studio City, Granada Hills, Los Feliz/Silver Lake, Echo Park, Burbank, Toluca Lake and Glendale. “The demographics in Southern California are prime for their expansion,” says Pakravan. “Submarkets are becoming denser; so, previously, there was a two-mile-radius restriction between shops. Now, we are doing deals within a mile from each other, and we are not seeing these stores' sales being affected by new openings.”
The three leases the retailer singed are located at 801 Hope St. location in Downtown Los Angeles, a 1,200-square-foot space in a mixed-use complex; 1197 E. Los Angeles Ave. in Simi Valley, a 1,700-square-foot space in a shopping center with major retailers Starbucks, Office Depot, Rite Aid, El Pollo Loco and 99 Cent Only; and 1603 Wilshire Blvd. in MacArthur Park, a 1,200-square-foot space in a power center co-anchored by Home Depot and Food 4 Less.
Due to the rise in popularity of fast-casual restaurants, however, there has been a supply shortage of quality spaces. “There are more players in the game. There are twice as many quick-service restaurants as there were five years ago, and they are all competing for the same spaces that we are,” Pakravan says. “There isn't enough quality space out there, so you are seeing a lot of people taking spaces at asking or even higher than asking rates. Fortunately, the brand has a great reputation.”
According to Pakravan, the sandwich company has stayed competitive for these spaces because of that reputation, which includes a strong and stable sales performance, a quality product and community involvement. “They are lighter, healthier sandwiches made to order and the company takes great pride in their ingredients which include Certified Angus USDA top choice rounds and 99% fat free turkey, making them the only QSR sandwich concept with a turkey sub that is approved consumable for pregnant women,” he says. “All vegetables are sliced fresh daily and the breads are baked fresh daily.” The company also holds a “Month of Giving” each year. This year, on March 25, 2015, the company donated all of its sales to local charities, a total of $3 million.
Kennedy Wilson was also recently hired to handle leasingefforts at Oceanwide Plaza, a $1 billion mixed-use development in Downtown Los Angeles from Chinese developer Oceanwide. At that property, the firm is also looking to include a variety of eateries that will serve the local community and tourists visiting the nearby Staples Center.
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Kelsi Maree Borland
