Multi-Unit Franchisee Magazine Issue III, 2017 - Page 60

SP AC E I S T H E P L A C E stimulated development, but the law of supply and demand still holds. This has shifted the balance of power, says Dan Burrell, a franchisee and area developer/ director with Jersey Mike’s Subs. “As more competition in a growing economy fights for space, we are back in a landlord’s market,” he says. “That reduces tenant improvement terms and other tenant in- centives and makes it difficult for single- unit franchisees to compete.” Burrell anticipates additional changes as the real estate market continues to tighten. “I expect landlords to not even offer exclu- sives, which help protect investments by franchisees. If franchisees want to get in the game, expect slim margins because rent increases continue to require more risk.” The price of land is rising, with com- petition keenest for prime space in high- traffic, high-visibility corridors—espe- cially for brands with similar footprints and customer demographics, says Schram. Says Thatcher, “The reality is we have fewer sites that are demographically feasible for new development. Many markets have been overbuilt and we’re seeing a trend toward urbanism. Cities want higher and better land use.” Back to brick-and-mortar A change few predicted when the dot-com boom began disrupting traditional retail is also affecting the real estate market. Although online sales made shopping from home easier and weakened many retailers, some online businesses are now establishing physical sales outlets, adding to the competition for the best locations. On the other side, many traditional brick- and-mortar stores pressured into adopting digital sales channels are converting some of their real estate into warehouses and distribution centers for their online sales. “All the lines are blurring and coming to- gether, driving the demand and absorption of gross leasable space,” says Thatcher. Mall operators also felt the pinch of the recession and e-commerce, but they are evolving and adapting too. “There has been a shift toward outdoor malls and power centers,” says Chris Naylon, net lease advisor for the Sands Investment Group in Sherman Oaks, Calif. He sees the changing tenant and customer mix at malls as an opportunity for franchise brands seeking space, especially those that serve food. “Customers are looking for an expe- rience beyond just shopping,” he says. “I 58 MULTI-UNIT FRANCHISEE IS S UE III, 2017 “The reality is we have fewer sites that are demographically feasible for new development." Robert Thacher believe restaurants will play a large role in revitalizing tired malls. They play an important part in adding to the overall shopping experience and attracting ad- ditional prospective shoppers.” More regulations, more delays While you can expect new rules and reg- ulations to cause delays with permitting, sometimes ѡ́ѕɽȴ)Ё͔͵ȁѽݹ́ѕٔ)ȁݼ́хݡ)ٕɱ䁥ɕ͕́ɽ)̸ٕ%ɕ́Ʌ)ѥٔȁɅ͕́ѡȁٕ̰)́ɝȁѥ́ЁٔՅє)յȁ́Ѽ)ѡఁЁѡ͵ȁѽݹ́ɽչ)ЁЁ䁑eи+qQ=ɱ5ѥձȁ)ݥѠѽݹ́ѡЁɔͥ䁽ٕȴ)ݡݥѠɕՕ́ȁ܁ٕ)ɽم̳t́ͅI1ձѤ٥ɕͥ)ɕхєȁɉéIхɅЁɽ)̰ͅqٕ́ɹ́͡)ɔѡݽɬѼͥձх)ЁɅѽ̰ѡѽɔ)ɽٕ́́ɔ)չɕхt)ѡȰ́ɔչѥ́)ٕݡ䁍ɍٕ)а䁅ɔѕѥѼɽЁ)ͥ́х́ͤ)͕̰ѡȁٕѥѥ)ȁѡѽͥѕ̸qQݹ́-ͥ)ɥɅѡ9͡٥)5ٔѕѡյȁ)ѥ́ѡݥ܁EMÍݥѠɥٔѡ)ѥ̳t́ͅ1ձѤq%ѥѼ)ɕͥѥѼɽمѡ͔)չхѥ́ͥє䁑ɥٔ)ѡɥեхͥѕ́ݡɔɥٔ)ѡ́ɔݕt)]Ёԁ)Ʌ͔ɕхєͥє͕ѥɽ)ݡٔЁݥѠѡ́ݹ)͕ٕɅ危́ٔɹ)݅́Ѽ͵ѠѡѠѼ)ѥ̰ѕȁݡЁѡѕɹ)ѥ̸́ѡ٥ɽЁѥ)Օ́Ѽ͡Ёɽչѡѡȁ̰)хܰɔЁѡȁɕȁ)ѡѼѥՅ䁅а)ٕЁ͍́ձ́ѼЁ)ɭ+ եɔѥIձѥ́)ٕ䁱ٕٕɹЁɔٕȴ)ก%ɥѡȁЁ)ɽӊéхеѼ͠ѥ̴́)хq]ٔͥѱ䁅ѕɕ)ѽɔхѥ́)ѥѼȁѽɔ͍ձtͅ)1ձѤq]͕ȁЁ)Ёѥձɱ䁕፥ѕѡ͔̰)́ѼɕѥѼչє)ɱ䁅ѕЁ́ѡ)齹ɽ̻tȁ䁹)եɽЁݡɔѡչ䰁)̰ͅq]܁ѥєմ)ѡ́ɽͥєѥѥѼ)%ɥݔЁЀ؁ѡ