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Windmill Building’s Next Life: Carlsbad Food Hall

Project Joins Growing Retail Trend in San Diego, US
February 28, 2018

The vacated Windmill Building in Carlsbad, which most recently housed a TGI Friday’s, will soon house a multi-vendor food hall.

One of San Diego County’s most unusual retail buildings, a 1980s-vintage Carlsbad property featuring its own full-sized windmill, is set to join a growing national trend toward artisanal food halls focused on local cuisines.

Brokers at Colliers International recently announced that James Markham, creator and founder of the Pieology and Project Pie restaurant chains, has leased a 12,000-square-foot space at 890 Palomar Airport Rd. in Carlsbad, CA for an undisclosed price, with plans to open the Windmill Food Hall this summer.

The restaurant and event space, located next door to the separately-owned Carlsbad by the Sea Hotel, was originally developed in the early 1980s as a location of the European-style restaurant Pea Soup Andersen’s, which closed a few years later. (The restaurant remains in business in the Central California towns of Buellton and Santa Nella, their windmills also still intact.)

The local building, owned by Carlsbad Properties Inc., has been vacant for three years and most recently housed a TGI Friday’s restaurant. Markham has not announced tenants for the upcoming food hall, but talks are underway with various vendors to set up shop within the indoor and outdoor space.

“Experiential retail and restaurant concepts will continue to thrive as consumers want choice when dining out,” said Bill Shrader, senior vice president with Colliers International, who represented Markham and the landlord along with Colliers’ David Maxwell and Serena Patterson.

Restaurateur James Markham plans to open a food hall this summer in the vacated Windmill Building space.
Markham is seeking to replicate the vibe of existing popular food halls including San Diego’s Liberty Public Market, where he operates two concepts - a wood-fired pizza venue called Doughballs and a breakfast bar eatery called Crackheads.

Other experts point to a food hall trend that has been expanding both locally and nationwide during the past few years. Another multi-vendor food hall, for instance, was recently announced for Piazza della Famiglia, the public plaza being developed as part of a larger mixed-use apartment complex in downtown San Diego’s Little Italy by H.G. Fenton Co.

Operated by locally-based hospitality group Grain & Grit Collective in conjunction with the developer, the Little Italy Food Hall is slated to open this summer with elements including six food stations, a full bar and a chef’s area with cooking demonstrations.

While San Diego’s independent 'foodie' culture has been on the rise for the past several years, its recent track record with food halls has been mixed. For instance, Liberty Public Market in Point Loma, operated since 2016 by Blue Bridge Hospitality in a former Navy mess hall at the mixed-use Liberty Station, has been deemed a popular success as its tenant roster has topped 30.

On the other hand, another food hall concept that debuted in 2014 in downtown’s East Village, called Bottega Americano, recently shut down after its operators filed for bankruptcy.

Still, there’s plenty of evidence that food halls have upward momentum when it comes to their real estate footprint, which is growing beyond the largest urban markets that have traditionally supported food halls, such as New York City, Chicago and Los Angeles.

A November 2016 report by Cushman & Wakefield, which listed Liberty Public Market among the nation’s top 20 food halls, noted that there were about 100 permanent, multi-tenant food halls in the U.S., including 18 projects under construction.

That number was projected to double to around 200 by the end of 2019, with at least 28 new food halls already in planning as of late 2016. In size terms, Cushman & Wakefield projected that food halls would expand their nationwide footprint by more than 900,000 square feet by 2019.

Brokers said the food halls have become popular for several reasons, including their attraction for diners seeking out fresh, local cuisine and retail landlords leaning toward e-commerce-resistant tenants such as eateries with lively social and entertainment elements.

The concept has become attractive for aggregating foot traffic for food-related tenants, such as new-concept startups and food truck operators, who might not otherwise be able to carry the costs for space in a traditional retail building. Cushman noted that lease deals tend to be shorter-term, often one to five years, with tenants often paying common-area maintenance charges for communal dining, cooking and other food preparation spaces.

Lou Hirsh, San Diego Market Reporter  CoStar Group   
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