Whitestone REIT Teams With Fast-Growing Restaurateurs to Make Second-Generation Dining Spots Flourish
Whitestone REIT (NYSE: WSR) has maintained strong demand for its restaurant spaces, comprising 18% of its gross leasable area, offering a 35% rental premium. The company has quickly filled vacancies, primarily with local restaurants that adapted well during the pandemic. With a focus on high-quality dining experiences, Whitestone’s properties are attracting restaurateurs seeking second-generation spaces, which ease costs and expedite openings. New restaurants, including Hudson House and Prey, are set to enhance the dining landscape in their respective locations.
- 18% of gross leasable area is occupied by restaurants, contributing 24% to average base rent.
- Restaurants pay a 35% premium rental rate compared to overall rates.
- Quickly backfilled restaurant vacancies due to high demand.
- Focus on leasing to fast-growing, well-capitalized local restaurants mitigated pandemic impact.
- Second-generation spaces facilitate faster openings and lower buildout costs.
- None.
HOUSTON, Nov. 11, 2021 (GLOBE NEWSWIRE) -- When restaurant spaces become available at Whitestone REIT (NYSE: WSR) properties, there’s no shortage of interest.
The priority for Whitestone, though, is to select the right tenant for the right property. In the case of restaurants, that means selecting restaurants that offer an exciting menu and dining experience which complements the preferred dining tastes and experiences of each property’s neighboring communities.
“Food connects people,” said James Mastandrea, Whitestone’s chairman and CEO. “Great restaurants make for great local connections.”
Those connections are important because restaurants make up
While some churn is normal even in the healthiest of centers, the COVID-19 pandemic led to an increase nationally. Of the restaurant spaces that opened up in Whitestone’s properties during the pandemic, many of those spots were quickly backfilled by restaurateurs who were attracted to the desirable locations and high traffic count of Whitestone’s centers.
With its focus on leasing heavily to fast-growing, well-capitalized local and regional restaurants, Whitestone was not impacted to the degree some other REITs were during the current pandemic. That’s because those restaurateurs were able to pivot immediately when dining rooms were closed for weeks — or even months — in some areas. Tweaks included adding impromptu drive-up lanes and expanded outdoor dining areas.
“The important thing about restaurants is that you have to make sure they’re built right initially,” Mastandrea said. “We’re heavily focused on that because it's very expensive. That way, when a restaurant goes out, the likelihood of filling it with a new concept is high. It's less burdensome for the landlord and for the tenant.”
Restaurateurs who select second-generation spots experience a number of benefits, including getting prime space in established centers and being able to save hundreds of thousands of dollars on buildout costs related to the kitchen and dining area, according to Modern Restaurant Management, an industry publication.
Some of the hottest restaurant categories right now, Mastandrea says, include small plates, healthy dishes, Ramen, Korean barbecue, and Nashville hot chicken. High-end bars with mixologists have become quite popular, as well.
“I love how our entrepreneurs were able to flex so quickly during COVID,” Mastandrea said. “The larger restaurant chains were closed, and the local guys figured out how to be open. All of a sudden you could buy gallon margaritas. The local guys got ahead of the game by being able to adjust quickly to adapt and survive. It strengthened their business models.”
In spots that did turn over, some are already open with new tenants while others are rapidly approaching their debuts. Here’s a look at some second-generation restaurants that have been recently announced at Whitestone’s properties in Arizona and Texas.
Hudson House, Las Colinas
Vandelay Hospitality Group was looking to expand its Hudson House concept and needed the right spot. The Dallas-based company found it at Whitestone’s Las Colinas Village.
The restaurant, which boasts that it serves “the world’s coldest martini,” offers an assortment of “straightforward and timeless dishes,” such as its trademark avocado dip, cheeseburgers with special Hudson sauce and chicken parmesan.
Hudson House is taking over a 5,200-square-foot space previously occupied by another restaurant, which “made it easier because the space already had a kitchen,” said Vandelay’s Vice President of Marketing and Communications Lauren Land.
“Hudson House appeals to many audiences and works to provide an approachable experience where guests can come with their family and return for a date night or night cap,” Land said. “With that in mind, we have been looking to bring it to the suburban Las Colinas neighborhood of Irving for quite some time.”
While a number of restaurateurs pressed the pause button on growth during the pandemic, Vandelay Chief Operating Officer Jon Peck said his company did the exact opposite.
“As a real estate-driven hospitality group, we focused our time in 2020 hiring outstanding talent, which provided us with the foundation we need to grow Vandelay Hospitality Group strategically in the years ahead,” he said.
Learn more about Hudson House by visiting www.hudsonhousehp.com.
Prey, Houston
A prime spot at one of Houston’s busiest intersections — just steps from the Galleria — was too good for the founders of Prey, a new restaurant concept, to pass up.
“The area fits perfectly because of everything I want to do,” co-owner Justin Kent said. “It’s a prestigious part of town. I just felt BLVD Place would be perfect for this concept.”
With both owners being from Louisiana, Prey features a heavy assortment of Acadian dishes, including oxtail surf and turf and stuffed Cajun salmon. The restaurant’s signature dish is the Filet King: a ribeye or tomahawk covered with scallops, crab and signature Prey sauce.
Landing in a second-generation spot helped accelerate the restaurant’s opening considerably, co-owner Ty Charles said.
“It makes things easier, especially the whole process with permitting and inspections,” she said. “It’s way easier than doing a whole new buildout. Everything is already ready for you there. You just have to get everything switched over.”
Outside of the kitchen, the restaurant space has been dramatically remodeled, offering diners a one-of-a-kind experience resembling a jungle.
“When people walk in, they're like, ‘Wow! This doesn’t look like anything we’ve seen before’,” Charles said. “Once they taste the food, they'll be wowed for sure.”
Learn more about Prey by visiting www.preyhouston.com.
Thompson 105, Scottsdale
Richard Federico, a seasoned, nationally known restaurateur, swore he was retired, but his persistent friend —Tim Donmoyer, an area resident who drove by the chosen center every day for years — had other ideas.
Federico, who previously led the P.F. Chang’s chain, was talked into helping open Thompson 105 in Scottsdale’s Desert Canyon shopping center. It’s expected to debut in January.
“I kept saying I really don't want to do a restaurant,” he said with a laugh. “But my friend was persistent to the point I finally said I'd go take a look at the spot he found.”
During his time in the restaurant industry, Federico oversaw more than 600 openings, so he knew firsthand the benefits of securing a second-generation spot. Still, he plans to invest heavily to make a great space even better.
“Our goal is to give them a fun and cool place in their neighborhood,” he said. “We're going to take full advantage of the location. We’re increasing the bar size…you name it.”
The restaurant, which offers views of nearby Thompson Peak, will feature a menu that leans heavily on dishes from a wood-fired grill and rotisserie, such as rotisserie chicken and rotisserie prime rib, as well as some burgers, pastas and salads.
“The menu will touch everything you'd be looking for in a polished, casual environment,” Federico said.
As coronavirus restrictions are being reduced or eliminated in many parts of the country, Federico says it’s an ideal time to open a new restaurant. “People are genuinely flocking back into restaurants,” he said. “Volumes have probably never been higher. Most everyone I talk to is well above their 2019 numbers.”
Learn more about Thompson 105 by visiting www.thompson105.com.
Gabriella’s Contemporary American Cuisine, Scottsdale
When chef Anthony and Anna Barr set out to open a neighborhood restaurant, his search for a site started and ended at Whitestone’s The Mercado at Scottsdale Ranch.
“Being the neighborhood restaurant is just amazing,” he said. “We do a lot of great things here. We can pack the restaurant. The people love the food.”
Dishes on the menu include beef Wellington. But “our restaurant is not only about the food,” Anthony said. “Named in honor of our daughter, Gabriella, it's about relationships with the people. The food is almost secondary. It’s all about creating an extension of home experience for our guests.”
Selecting a second-generation space helped speed things up considerably, while still allowing Barr to put his own mark on the restaurant’s interior.
“When we designed our restaurant, we wanted it to feel like you were coming into our home,” he said. “An atmosphere that made you feel welcome from our family to yours.”
Working with the Whitestone team made things easy, start to finish, according to Barr.
“Whitestone has been great for us,” he said. “Any time I've needed anything, they’re always there. It's been amazing. I feel like a real person. I'm a part of the Whitestone family and they want to see me succeed.”
Learn more about Gabriella’s Contemporary American Cuisine by visiting www.gabriellasscottsdale.com.
About Whitestone REIT
Whitestone is a community-centered shopping center REIT that acquires, owns, manages, develops, and redevelops high-quality neighborhood centers primarily in the largest, fastest-growing and most affluent markets in the Sunbelt.
Whitestone creates communities that thrive through creating local connections between consumers in the surrounding communities and a well-crafted mix of primarily entrepreneurial local, regional and national tenants that provide daily necessities, needed goods and services, entertainment, and experiences.
Whitestone (NYSE: WSR) pays monthly dividends to its shareholders and it has consistently done so for more than 15 years. Whitestone’s strong balanced and managed capital structure provides stability and flexibility for growth and positions Whitestone to perform well through economic cycles. For additional information, please visit www.whitestonereit.com.
Safe harbor statement
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" or similar expressions or their negatives, as well as statements in future tense. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. For a description of certain of such factors, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and the Company's other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
Investor and media contact
Rebecca Elliott
Vice President, Corporate Communications
Whitestone REIT
(713) 435-2219
ir@whitestonereit.com
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