Revolving Retail: An Innovative Approach to Leasing

Posted on 8.17.15 by Jeanne Peterson in News & Trends

Kitchen LTO main image

Do you have a fabulous new concept that you passionately want to share with the rest of the world, but are having difficulty fronting the initial overhead costs that oftentimes accompany brilliant ideas? Incubators may provide a solution. Let’s call it the musical chairs of the retail/restaurant industry with a whole lot more winners.

Since the economic disruption of the Great Recession in 2008, landlords and brokers have embraced new approaches to successfully leasing properties. One such strategy includes the revolving tenant showcased in the incubator model.

In the business world, an incubator is referred to as “an enterprise that is set up to provide office space, equipment, and sometimes mentoring assistance and capital to new businesses that are just getting started.”

Today, entrepreneurs have taken the incubator idea a few steps further by forming like-minded collectives of small businesses still in their formative stages. Incubators offer business owners affordable retail space, a collaborative environment, and administrative support that they would otherwise have to handle alone. Perhaps most importantly, they create opportunity for small businesses to succeed and grow, often supporting local and regional talent.

Dallas’ Trinity Groves is home to a restaurant incubator model, Kitchen LTO. Kitchen LTO provides chef-driven concepts and artists the opportunity to present their wares in an established environment for a limited time, typically for six months at this venue. Incubator retail has become quite the catalyst in re-igniting the restaurant scene for many local economies.

Pink Magnolia, a Kitchen LTO protege, is scheduled to open a permanent location in summer 2015 and offers patrons tasty fare with what chef, Blythe Beck, describes as “swanky Southern flair.” Chef Beck’s concept spent a year in the Kitchen LTO environment before deciding to launch Pink Magnolia with restauranteur, Casie Caldwell.

Union Kitchen

In the national arena, venues such as DC’s Union Kitchen have been a notable proponent for the retail/restaurant incubator model. Since it’s launch over two years ago, over 120 start-ups have graced the facility, many simultaneously. One delightful concept is Potomac Pastry. To date, 15 of the start-ups have successfully opened in permanent locations around the DC area. These successes have spawned additional growth with a new incubator location, a 15,000 square-foot warehouse, in the Ivy City area of DC.

The affordable retail lease approach has also gained global momentum over the past five years.

IncuBus-Ventures-partners-with-Camden-Market-for-retail-incubator

In the United Kingdom, IncuBus Ventures has partnered up with Camden Market to launch a retail start-up that will “nurture” 18 selected applicants who will literally be mentored on a bus. The applicants’ concept backgrounds are broad; ranging from e-commerce, to fashion, to food and drink. The program is set to begin running in September 2015 for a three-month period and offers expertise from successful businesses like ASOS and Burberry. The end result will hopefully create new market opportunities for landlords, brokers and retailers and restaurants alike.

Looking for proven direction in finding the best incubator option for your retailer or restaurant concept? Reach out to one of our knowledgable brokers at CBRE.

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