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VOL. 126 | NO. 106 | Wednesday, June 1, 2011

Restaurants, Retail Enter Memphis Market

By Sarah Baker

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It’s perhaps the most cliché phrase in the real estate business: location, location, location.

So far in 2011, Memphis has seen a plethora of household names enter the market – Chipotle, Five Guys Burgers and Fries, Urban Outfitters and Staples Inc., among others. And by the close of the year, the perfect location is a critical contingency that even more nationally recognized brands are hoping to have settled.

Taziki’s, a Birmingham, Ala.-based casual Mediterranean café, is steadfast at having an East Memphis/Germantown location up and running by 2011’s end. Co-founder Keith Richards has traveled the possibilities but is trying to pin down the right location for his target clientele.

“A lot of the people who know us from Birmingham live in the Germantown area,” Richards said. “We’re trying to quickly get up there; we’re looking every day.”

Charlie Oats of Oats Commercial Properties is Taziki’s exclusive tenant rep for the Memphis market. He said the restaurant faced a common hiccup in the real estate process – competition.

“(One landlord) had an exclusive-use clause in one of their tenants’ leases that prevented Taziki’s from going in because they serve sandwiches and salads,” Oats said. “These tenants’ leases frequently have exclusive-use clauses and those clauses are designed to keep competition out.”

As the market turns around and the city adds more and more national names to its retail portfolio, Memphis is poised to see a halo effect of deals, Oats said.

“I think Memphis is one of the markets that a lot of these people have on their short list – some of them are going to go to some of the larger cities first and when they get that done, then they’re going to come here,” Oats said. “I don’t know that Taziki’s, Five Guys and Chipotle and the others coming are going to sway those other folks, but it is true that there are some that won’t go into a location unless there’s a user already there.”

Cheddar’s Casual Café is another restaurant that sees Memphis as a target destination for its loyal following. The Texas-based casual American dining chain signed the first of three leases at the end of 2010, and has broken ground at its 8,600-square-foot debut location in Centennial Commons at Tenn. 385 and Winchester Road.

Project developer Lee Greer of Lexington, Ky.-based Greer Cos., the largest franchisee of Cheddar’s Casual Café, hopes to open the doors by early fall. He’s also been working on another location for quite some time, this time in Cordova.

“It’ll be in the Wolfchase area at Germantown Parkway,” Greer said. “That deals’ been on again, off again for a year and a half, but it’s pretty much a done contract.”

Another example of a retailer on the growth spurt in Memphis is office supply giant Staples. The Framingham, Mass.-based company signed a 17,945-square-foot lease at Ridgeway Trace in January, and has filed a $990,000 building permit for a new store in the Galleria of Memphis, adjacent to Kohl’s in the 130-acre retail development at Interstate 40 and North Germantown Parkway.

Unlike Taziki’s and Cheddar’s, Staples operates in a more conservative manner, not speaking about potential locations before the ink is dry on the lease. While the corporate office confirmed it had signed two Memphis-area leases, spokeswoman Carrie McElwee was tight-lipped about the firm’s due diligence process in selecting its Memphis locations.

“We would never go into plans on saying anything further on our overall strategy, but I can tell you that our customers are small-business owners, so that is some of the stuff that we would look into,” she said.

PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396