Proven Restaurant Concepts To Receive up to $475,000, Retailers up to $200,000
City leaders concerned about the impact of declining office occupancies in the urban core have been working to breathe new life into downtown Orlando with the goal of making it a stay-and-play foodie destination. They envision a vibrant urban core with curated neighborhoods and full-service, fine-dining restaurants and retail that is more resistant to the types of headwinds affecting office fundamentals today.
They took a big step in achieving that goal in October when the Orlando City Council unanimously approved changes to the Community Redevelopment Agency Downtown Incentives, which CoStar previously covered earlier this year.
There are two programs, one that benefits restaurants and one targeting retail tenants. The Downtown Orlando Restaurant Program offers up to $475,000 in funding to cover tenant improvement and rent expenses for proven concepts with five years of experience within its focus area to help offset the cost of moving to downtown Orlando.
Up to $400,000, or $100 per square foot, can be applied toward tenant improvements on a full-service restaurant, with another $50,000 to help offset rent expenses, and the final $25,000, or up to $5 per square foot, can be used for outdoor seating. The city hopes to lure a handful of fine-dining restaurants through the program, with a particular interest in securing tenants in the Parramore and Creative Village, along with the central business district.
Start-up expenses for restaurants can often be substantial, especially when transforming vacant commercial space with a different former use, and the program will help to remove that barrier preventing leasing activity. There is arguably a shortage of restaurant options in the urban core, although there have been several key announcements in 2023 that have generated some excitement, such as the Debonair Supper Club coming to The Plaza and a German scratch kitchen that will replace Neon Beach bar on Orange Avenue. As of the fourth quarter of 2023, CoStar is tracking fewer than 40 properties classified as restaurants in downtown Orlando.
Qualifying retail tenants with up to two years of experience are also eligible under the Downtown Orlando Retail Program to receive up to $200,000 to support the same expenses, but it’s important to note that the Community Redevelopment Agency program does not provide any funds for non-retail users, including bars and nightclubs.
One of the first tenants to benefit from the program is Luxe Med Spa, which was represented by Rebekka Thomas, leader of development and construction with T&T Contracting Group, at the meeting where the revamped incentives were approved. The company will be receiving $150,000 toward its space buildout, along with full rent relief of $25,000. Thomas shared that they were required to have full construction documents for permitting along with three high-quality construction bids to be approved for the incentives, and she worked with several general contractor partners to get past that hurdle.
The “Downtown Orlando Stimulus Program is more than just a financial booster. It’s a visionary step towards a promising future for downtown Orlando,” Thomas said. “By backing Luxe Med Spa and similar establishments, we’re not only elevating individual businesses but also the broader downtown community.”
These changes to the Community Redevelopment Agency’s incentives program mark a significant increase over what was previously available. Prior to the changes, applicants were eligible to receive up to $75,000, or 50% of the total cost of tenant improvements, whichever was less. They could also receive a one-time award of up to $25,000 to cover rent expenses. The maximum total funding amount under the program per eligible business was $100,000.
In downtown Orlando’s primary zip code of 32801, there is 1.2 million square feet of retail space, which comprises less than 1% of the total inventory of retail space in Orlando. Within this group, vacancies have risen considerably in the past several years, moving up from 3.5% in the fourth quarter of 2019 to 14.1% in the fourth quarter of 2023. In fact, it has moved up about 250 basis points in the past year alone, and net absorption, the change in number of square feet occupied, has fallen to negative 66,200 square feet as of the end of October.
Source: By Lisa McNatt Costar.com