An Institution’s Parcel Is in PlayMarch 29, 2022
Home to Popeyes Louisiana Kitchen since 1986, the 2,000-square-foot building and parcel on the southwest corner of Divisadero and Hayes, which was purchased for $350,000 in 1988, is now on the market with a $2,395,000 price tag.
The substandard corner parcel is zoned for development up to 65 feet in height and mixed-use development, including residential uses. But Popeyes, which is currently paying a below-market rent of $3.17 per square foot for the building, has recently extended their lease through 2026 and has two more five-year options which could extend their tenancy through 2036 for a 50 year run.
In marketing speak, the property offers “hard-to-replicate tenant stability” in the middle of NoPa and along the Divisadero Street corridor.
Comments from Plugged-In Readers
Is there a formal definition for “substandard parcel” here? Like, the lot is smaller than a typical 100 x 25 or distressed in some way? Just curious what that means.
I think it’s size. This lot is 2000 sq ft. Most the other lots are closer to 2600. 1307 Hayes street chopped off the back fifth of this parcel and its two neighbors.
New formula retail is a conditional use in this zone, but incumbent fried chicken chains are “institutions”.
You must be a commercial landlord looking to replace a mom and pop local business with a national or international chain and are expressing your jealousy of the landlord owning the subject property. Deeming this fast food restaurant an “institution” was an editorial choice by socketsite for this post, and doesn’t have any sway over what local planning regulations would categorize as a “formula retail” land use.
Also, San Francisco voters passed the original formula retail law in 2007, so this fried chicken restaurant’s tenancy predated the institution of the use controls you decry.
Mmm – red beans and rice, fried chicken, coleslaw and iced tea …. My guilty pleasure.
Divis has some funk to it and Popeye’s is one reason. While I don’t go there, I respect it for providing a counterweight to the onslaught of gentrifying businesses. I hope they stick around until 2036. I wouldn’t be shocked if it got legacy status, although I’m not sure if a national chain can qualify.
Technically, the eligibility criteria for Legacy Business status doesn’t preclude chains from qualifying, but one is unlikely to be nominated by a Supervisor or pass muster with the Small Business Commission.
Regardless, being deemed a “Legacy Business” doesn’t confer any special protections for a business, simply financial support, as we’ve outlined and previously noted.
I suppose swenson’s qualifies as a legacy business, even though at one time it had expanded as a national chain with hundreds of locations, now dwindled to just the original location in SF.
Out of curiosity looked into this and apparently Swensen’s was purchased by a conglomerate that owns a handful of other big ice cream chains and there are currently over 300 Swenson’s franchise locations around the world, mostly in Asia. Another informative SocketSite digression.
Yes, the last time I was at Swenson’s it was in Thailand.
Between Popeye’s and $4.50 beers on tap at Bean Bag across the street, it seems like this corner of Divis is the defiant holdout against the tide of gentrification. Planning has tagged this building as a category A historic resource, so I wouldn’t expect to see it getting knocked down anytime soon.
Keep in mind that being deemed a historic resource doesn’t preclude the redevelopment of a parcel or the razing of a structure, unlike being landmarked, but it could require measures to mitigate the loss (either in terms of incorporating features of the existing structure or memorializing its history by way of an exhibit or the like). And as we outlined above, the building isn’t likely to be knocked down within the next 14 years, regardless, which leaves plenty of time for planning and approvals.
The tenant is not going anywhere anytime soon.
Property listing facts:
Sale Type, Investment NNN, Property Type Retail, Property Subtype Fast Food, Building Size 2,000 SF, Building Class B, Year Built 1918, Price $2,395,000, Price Per SF $1,198, Cap Rate 3.17%
Land Acres 0.05 AC
Lease 4 years remaining with two 5 year options
We just purchased a brand new QSR for $2.5M with a %5.05 cap, new 20yr lease, 7% rent bump every 5 and current NOI of $129.5K
Good luck selling this property at the current NOI and Cap at 3.17%.
See name link for property listing.
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