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Avondale has landed deals with two restaurants to expand their businesses to the city’s blossoming City Center.
The Avondale City Council last week approved lease agreements with Carlos O’Brien’s Mexican Restaurant and Ground Control Coffee and Wine Bar, each with existing Valley locations, paving the way for the two businesses to set up shop at the City Center’s “Main Street” retail corridor.
The 25,000 square feet of retail space is under construction along 114th Avenue immediately in front of the new American Sports Centers Avondale @ Randall McDaniel Sports Complex, which opened in November.
The sports facility and the Main Street retail mark the first developments to come to the city’s ambitious City Center project, a 400-acre, mixed-use vision of an urban-style environment straddling both sides of Avondale Boulevard south of Interstate 10.
The retail buildings are scheduled to be completed by Feb. 28. The scope of work includes the construction of the building’s core and shell. Interior finishes are to be completed by the tenants per their lease agreements.
A deal with Carlos O’Brien’s
“During the past year, staff has identified potential businesses that were looking for expansion opportunities and would complement the City Center,” said Dan Davis, Avondale’s economic development director. “Now we’ve got a couple of good operators.”
As part of agreement, Avondale will purchase 15.36 acres of real property from Carlos O’Brien’s for $3.1 million. The restaurant company, which has locations in central Phoenix and Scottsdale, had planned to build an eatery at the vacant land near Avondale Boulevard and City Center Drive, but now will operate out of the Main Street retail.
The deal splits the 15.36 acres into three parcels: A, B and C, and grants the owners of Carlos O’Brien’s the option to later acquire blocks A and C for $1.53 million – the same cost per square foot that the city paid – with an annual option payment of $70,650. The city would retain the middle parcel, block B, for future City Center development, Davis said.
Jeff Lipson, co-owner of Carlos O’Brien’s, said he plans to begin operating out of the new Avondale site by fall.
“I love it,” he said. “People have been asking me for years, ‘When are you going to open up, when are you going to open up?’ Now we can say we’re hoping to open in September.”
The full-service Mexican restaurant will sit on 5,600 square feet of space, and have a 1,200-square-foot patio at the north end of the site.
The initial term of the lease will be seven years with the option to extend the lease for two additional five-year periods. The annual lease for the tenant is a base lease amount of $102,000 plus 7 percent of the adjusted gross sales in excess of $2 million.
The city is also providing the tenant an allowance of $300,000 related to the dining and public area improvements. In addition, Avondale will contribute up to $300,000 for the purchase and installation of all necessary kitchen equipment needed for the proper operation of the restaurant.
The agreement also allows Avondale to retain ownership of all kitchen equipment and the fixed dining room and public area.
Any costs above the $600,000 will be the responsibility of the tenant. Carlos O’Brien’s will provide a minimum of $500,000 that will be used for furniture, fixtures and equipment, and will be responsible for all professional design fees associated with the improvements.
As a condition of the purchase agreement, the owners of Carlos O’Brien’s have agreed to open and operate a second full-service, 6,000-square-foot restaurant within one year of the completion of retail space on Block B, Davis said.
Ground Control signs on
Ground Control will occupy 2,500 square feet of floor space and have a 525-square-foot patio near the south end of Main Street. The full-service coffee and wine bar has another location in Goodyear.
Sean Rassas, owner of Ground Control, said his new shop will be up and running on or before Sept. 1.
“The sports center has really been a draw for people all over the Valley, and Avondale’s done a great job of marketing [the City Center] as a destination for their residents,” Rassas said. “That makes it a great opportunity for expansion and a great partnership to have.”
The initial term of the lease will be seven years with the option to extend the lease for an additional seven years. The initial lease for the tenant is $59,940, plus an increase each year beginning in year two and continuing until the end of the seven-year period for a total of $494,660.
The city will provide the tenant an allowance of $270,000 that will be used for tenant improvements, including the dining and public area improvements.
Ground Control will supply and install all kitchen equipment and other furniture, fixtures and equipment needed for the restaurant. The cost of those improvements is not expected to be less than $100,000, Davis said.
Any additional costs incurred for building improvements will be the responsibility of the tenant. Ground Control will be responsible for all professional fees associated with the improvements.
2011 looking good
With two lease agreements under the city’s belt, this year looks to be a good one for the City Center, officials said.
“We’ve kicked off the new year very positively. We’re very pleased with the pre-leasing as it’s been going,” said John Ruggieri, Avondale’s City Center development specialist.
Currently, about 33 percent of Main Street’s 25,000 square feet is pre-leased, but that number is expected to go up soon, he said.
“We are currently working with a sports bar and restaurant group and anticipating bringing that to the market shortly,” Ruggieri said. “That would take us to about 50 percent.”
While Ruggieri would not name other potential restaurants or retailers for the Main Street corridor, he did indicate the city is in talks with “about five potential tenants” from a variety of sectors, including more retail, multimedia and additional food services.
“We have hopes that the balance of the retail will be leased out,” Ruggieri said. “We have strong interest. I’m expecting a good lease-up in 2011.”
And that’s something the city is excited about, he said.
“Especially in this economy, to be able to have this kind of response from the retail community is very encouraging,” he said.
And now that Avondale has made the land deal with Carlos O’Brien’s, the city can begin focusing on the second phase of the City Center, Ruggieri said.
“I think this is a real win-win situation. The purchase of the O’Brien’s property opens up the potential of future development in the City Center in a manner that supports the city’s investment in the first phase,” he said.
Essentially, Ruggieri explained, Avondale is considering three different options for the next phase of development. One would bring in professional office space; the second would focus on hospitality; and the third would be a combination of multi-family residential and retail.
“The city is carefully analyzing the respective market sectors and the capital markets to discern which project type would be both financially feasible and consistent with the longer term goals of the City Center,” he said.
Thanks to the sports complex
And there’s no letting down now, officials said.
“The implementation and development of the Avondale City Center continues to be a primary economic development focus,” Davis said.
Both Davis and Ruggieri attribute the City Center’s momentum to the success of the $11 million American Sports Centers Avondale @ Randall McDaniel Sports Complex, which brings in thousands of amateur and youth sports players and their families to the center each month.
That facility “is creating additional development opportunities for the city,” Davis said.
“Things are going extremely well for us. Obviously, American Sports Centers is a big marketer for us, driving a lot of people into City Center,” Ruggieri said.
“This has been three years in the making,” he said. “It’s right on schedule, the development is responding quite well to the market, we’re leading the market. We’re very pleased with our progress.”
And now that the city has newly leased tenants – and could soon have half of Main Street’s retail pre-leased – “that’s going to be an added asset for the project,” Ruggieri said. “It’s going to get us what we’re seeking to accomplish: A great City Center development.”
Frank Morris can be reached by e-mail at fmorris@westvalleyview.com.
