Going to a restaurant is one of my keenest pleasures. Meeting someplace with old and new friends, ordering wine, eating food, surrounded by strangers, I think is the core of what it means to live a civilized life.
Adam Gopnik, The New Yorker
I’ve not found a better tool for juicing surrounding property values than a good restaurant. And it’s not the fancy places that do it, although they tend to arrive later. It’s the unique places, the idiosyncratic ones, owned by a talented local and delivering an everyday experience that resonates with the community.
Bustle feeds on itself. We’ve all experienced it and we’ve also all experienced how those places are the first domino to fall in a neighborhood’s transformation.
It seems like overnight, but these transformations are decades-long overnight successes. The pattern goes like this: a restaurant opens in an overlooked part of town. The place has a special something that makes it feel alive - and a sense of community pride emerges.
Then, another idiosyncratic place opens next door - an anime art studio or a build-your-own flower shop or a custom motorcycle joint, depending on the neighborhood - and a groundswell starts. The vibe compounds as more openings build on the initial energy and further evolve a distinct personality for the neighborhood. Singular food and beverage offerings surface: an empanada counter, for example, or a mezcal bar. Or unlikely combinations like soft serve and omakase.
Specialty markets then follow, whether a gritty mercado or a spendy Erewhon, and the tipping point occurs as homes, hotels, and offices spring up, drawn to the unique energy of the place. Property values then start to reflect the sharp increase in desirability.
Being greedy real estateurs, we’ve got an affinity for restaurants. Not the formulaic chains - they tend to have the opposite effect, draping a wet blanket over property values. But the young upstarts, the ones that can ignite a forest fire of surrounding property value.
We invest in restaurants, and have since the inception of our company almost 20 years ago. Whether it’s helping turn a warehouse into a kitchen, paying for grease traps and air conditioning, or funding operating expenses, we’ve done it all. When they work, they’re like leaf blowers filled with cash, and when they don’t you can warm your hands against the fire of incinerated dollars.
We prefer the former and look for operators with a glint in their eye (the trick is finding the ones where the glint isn’t narcotics-induced) - the young, scrappy, and customer-obsessed that have a unique offering. They’ve also got to have an even keel, here’s why:
Real estate ownership is a plodding endeavor - long naps interrupted with occasional terror. Restaurants are the opposite, daily disasters and once every few years a moment of peace.
Most real estateurs - me included - can’t handle the compounded chaos of restaurants. I admire from afar, cheering on our tenants and partners but giving their operations a wide berth.
A few years ago I stopped by one of our newly-opened taverns. Approaching the entrance I was encouraged to hear lots of activity, thinking maybe a big crowd showed up to watch a college football game.
Instead, it was live entertainment: two of the bartenders were in a fistfight. And as that ended, a middle-aged man, dressed in a golf shirt and wearing horsebit loafers, was raising hell with the bartenders, not about the fistfight but that his car had been stolen. Apparently he’d tossed his Mercedes keys to someone who wasn’t a valet.
More noise came from the open kitchen. An ambulance arrived, and not for the bartenders (although both were bloody), but for one of the line cooks that was having a seizure.
As the paramedics entered the kitchen, the Sysco delivery man was looking for a signature, dinner service was ongoing, the hostess was taking down the Mercedes man’s information, and the bartenders were glaring at each other while the bar crowd roared about a touchdown.
I watched with panicked admiration as the operators eased everything back to a sense of normalcy, thankful the most exciting thing we had going on was an upcoming refinancing.
If you’re reading this, you’re probably interested in real estate.
If you’re interested in creating wonderful places, and how those places can increase surrounding real estate values, consider joining the Tacos & Patios Workshop - a free online gathering where we unpack the how and why behind unique mixed-use developments.
Join now and get a recording of the last meeting, a workshop with Casey Lynch, CEO of Roundhouse, one of our country’s most talented multifamily developers, where we discuss how a singular pizza shop changed the trajectory of his company.
And if you’re interested in a deep dive, apply to join the epic in-person gathering on October 16 & 17 where we bring together real estate developers interested in making wonderful places and the innovative retail & hospitality brands, designers, contractors, and capital providers that bring those places to life.
October 10th is the last day to join.
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