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Hungering for Good News?

While downtown’s restaurateurs bemoan the lease rates that building owners charge, particularly as they see patronage declining, demand for space created by a continual stream of operators coming on line means those rates will keep going up.

The primary reason, says Steve Zolezzi, executive director of the San Diego Food & Beverage Association, is that owners are willing to take the risk that they can make a go of it where others have failed.

More space is opening up downtown, most of which is in new or remodeled buildings in the East Village, and analysts say that that neighborhood, which encompasses Petco Park, will set the bar for retail lease rates.

According to Corinna Gattasso, director of Cushman & Wakefield’s Urban Property Group, lease rates in the East Village currently average from $3 to $4.50 per square foot, plus the lessee pays a share of the property taxes, insurance and operating expenses.

Jimmy Parker, director of the Gaslamp Quarter Association, said that a restaurant tenant that signed a long-term lease in 2000 is paying from $1 to $2.50 per square foot, depending on the property. He also said that some retail space is going for as much as $7 a square foot downtown.

Meanwhile, four new eateries are scheduled to open near the ballpark late this year or early next year, said Cushman & Wakefield.


Room For Hopefuls

Downtown boasts more than 100 eateries, including the 80 that are in the 16.5-block Gaslamp Quarter alone.

So how do the new kids on the block expect to make it in such a competitive arena?

Pablo Becker, who grew up in his family’s restaurant business, says he’s confident that his new El Vitral Mexican Cuisine and Tequila Lounge slated to open on J Street in mid-December fills a niche for something different. Its menu will be upscale traditional including such entrees as marinated halibut and smoked and grilled duck breast.

With personal savings and family backing, Becker said he started planning El Vitral a year and a half ago before the economy started to dive. But current conditions have also brought the venture a windfall in terms of lower construction costs.

Projecting that the cost of construction in 5,436 square feet of space in the historic Schiefer Building on J Street would be between $1.5 million to $2 million, Becker said it would have been much more before the subprime lending meltdown took the steam out of commercial construction.

El Vitral signed a 10-year lease for $2.75 million annually, said Gattasso, who brokered the deal.

Ken Mills said people told him he was crazy when opened his first Wine Steals, a wine tasting bar in Hillcrest six years ago while the economy was still struggling in the wake of the Sept. 11, 2001, terrorist attacks. Now he plans his fourth, Wine Steals & Proper Pub, at the historic Kvass building, renamed the Legend condo building on Seventh Avenue. Wine Steals’ other locations are in Point Loma and Cardiff.


More In The Works

“People usually come to Wine Steals before and after dinner,” he said. “So what we’re doing in the East Village is putting a good place to eat right next to us.”

He said he and his business partner, Warren Mack obtained some financing. He didn’t give the sum.

Its 10-year lease for 7,721 square feet at the Legend is $2.8 million, Gattasso said.

She announced the signing of two other 10-year leases in the East Village. One is for $816,420 annually for Acqua E Terra in 1,502 square feet in DiamondView Tower on J Street.

Acqua E Terra, a wine bar, is a sister establishment of Acqua al 2, a restaurant in the Gaslamp Quarter.

The other lease is for a new Mediterranean-style restaurant, Banc, which will occupy 2,877 square feet in the DiamondView for $1.5 million a year.

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