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Property Investors Increasingly Prefer the Flavor of Fast-Casual Restaurants

Sit-down, full-service restaurant chains operating in national and Philadelphia commercial real estate markets continue to face pressure from fast-casual competitors, and not just in the competition to woo diners.

Investors also appear to be losing some of their appetite for real estate in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – that has been leased to such “casual dining” chains such as Hooters, Outback Steakhouse, Red Lobster, Chili’s and Texas Roadhouse.

This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Cap rates, the annual yield for U.S. and Philadelphia commercial real estate listings, jumped up in the first quarter for so-called “net lease” properties tied to casual dining restaurants.

According to a report from Wilmette, Illinois-based real estate firm The Boulder Group, “cap rates in the net lease casual dining sector increased to 6.32%” in the first quarter, up from 6.05% a year ago. The firm noted that the rate of increase among national and Philadelphia commercial real estate properties was wider than other types of net lease investment properties.

Net lease properties involve leases in which the landlord has little to no responsibility for managing the real estate beyond collecting a rent check. An increasing cap rate in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – can reflect the greater risk that a tenant might struggle or fail to renew at the end of its lease. The length of the term left on a lease is one of several factors used in determining the cap rate. The more years left on a lease tends to attract better prices for the property and lowers cap rates.

Many investors looking for lower risk among national and Philadelphia commercial real estate listings have targeted fast-casual properties, or restaurants that typically do not offer table service. Earlier this month, the dirt underneath a Portillo’s in Normal, Illinois, sold for $4.4 million and is expected to produce an annual yield of 5% for the private investor. – By Richard Lawson; CoStar Realty Information Inc.

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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