After weeks of rumors and negotiations, it’s finally official: the lease for a 5,400 square foot IHOP at 1019 Surf Avenue in Coney Island was signed on Thursday, broker Joe Vitacco told ATZ. The franchisee who will be operating the restaurant is Bryan McKenzie, who owns an IHOP in New Jersey. Construction is expected to take about four months after the landlord completes the vanilla shell.
The one-story building at 1019 across the street from Luna Park is a longtime furniture store, which is not among the use groups permitted by the zoning. The space is being subdivided into six storefronts by the landlord and the stores are in the process of getting new street numbers. IHOP will combine the three stores on the far left and the soon-to-open Subway Cafe has the one on the right. Two remaining storefronts totalling 3,000 square feet are expected to be snapped up by another franchisee.
Why is Surf Avenue becoming a mecca for franchises? “The franchise is a preference of the landlords in Coney Island,” says Vitacco, who has leased space on Surf Avenue to Johnny Rockets, Subway Cafe and Rita’s Italian Ice, as well as to Brooklyn-based bakery Piece of Velvet for their third store. On Mermaid Avenue, he has leased to such Mom & Pops as a fish store and a Chinese bakery, as well as a Jamaican patty store franchisee.
“First of all, the franchisees are better funded. They are required to have half a million to two million in assets. They are trained and helped by the franchise company and have a high chance of success.” Many also own multiple businesses, which enables them to spread the risk. The Johnny Rockets franchisee owns several other franchise restaurants, Vitacco says.
Unlike Manhattan, where Mom and Pops are being forced out by landlords who triple the rent and then turn around and lease to chains or upscale businesses, many of the new franchises on Coney Island’s Surf Avenue are replacing illegal furniture stores which have existed for years in defiance of the zoning. Amid the influx of already opened national chains and franchises such as It’Sugar, Applebee’s, Rita’s Italian Ice, and Dunkin’ Donuts on Surf Avenue, there have also been a few new Mom & Pops like Lunatics Ice Cream and Luna Park Cafe, which have no connection to Luna Park.
The relatively large size of the stores is also a factor. The average price per square foot on the north side of Surf is $50.00 per square foot, Vitacco tells ATZ. On Mermaid Avenue it is $45 per square foot. “The difference in price from space to space depends upon the amount of landlord work. A space can be rented in ‘as is condition,’ as a Vanilla Box or as built to suit. The conditions will affect the rent.”
Asked why we aren’t seeing more a diversity of businesses instead of all restaurants and food? Is it too expensive? Vitacco says, “Because food pays the highest per square foot. Remember on Surf Avenue we are limited by the Coney Island C7 special zoning.”
According to the rezoning of 2009, permitted uses include:
–Open and enclosed amusements with limited accessory retail. Amusement uses would also include virtual reality and simulated gaming, dark rides, recreational sports facilities and water parks.
–Restaurants of any size, including those with entertainment and dancing. It would also include other complementary uses to amusements uses such as performance venues, bathhouses, breweries, tattoo parlors or wedding chapels.
–Retail and service uses complementary to amusement uses and beach activities such as arts and crafts production and sales, bicycle sales and repair, gift shops, and beach furniture stores. These uses would be limited in size and frontage.
Related posts on ATZ…
September 11, 2013: Subway Cafe to Replace Furniture Store on Coney Island’s Surf Ave
December 19, 2012: Will Coney Island’s Surf Ave Become a Mecca for Franchises?