by Michelle Boudin

Despite owning one of Charlotte’s most beloved restaurants for more than two decades, even Andy Kastanas was surprised by one of the biggest changes he’d seen hit the local food scene. Soul Gastrolounge had been in Plaza Midwood since 2009 when Kastanas closed in 2022, and found a new home in Third & Urban’s mixed-use development, The Pass, in August of last year. As he negotiated terms for the space, he learned the “new” way landlords were handling leasing agreements.

“The lease requirements now are not just for rent, you also have to give them a percentage of your sales as well, so the landlords look at how much you’ve sold and they take a percentage of it,” he says. “It’s the way of the world now, I guess.”

Adam Williams, Principal at Rebel, Rebel, Urban Retail Advisors, and Legacy Real Estate says the updated leasing terms have actually become pretty commonplace in recent years in both restaurant and commercial real estate in general, and he believes it’s a sign that Charlotte is finally playing in the big leagues.  

“It’s a really, really exciting time for Charlotte and I know that it comes with growing pains,” Williams says. “Charlotte is becoming a major metropolitan city, and if you want to be in prime corridors in a major metropolitan city, that real estate is typically owned by large players. It’s insurance companies, pension funds, private equity. It’s people that can go in and write big checks for this prime real estate. It’s a very exciting for the city and for the people that live in these urban areas that want a cosmopolitan feel.”

Williams says that comes with a price tag and a certain way of doing business. Asking for a percentage of sales has been standard in bigger cities for years, and Charlotte only recently caught up.

“Ten years ago, there was just a lot less sophisticated players in the market,” Williams explains. “The leases were probably much more basic. If you’re doing larger landlords with institutional leases that paid top dollar for prime real estate, percentage rent is usually a part of the conversation. I’m not saying it happens every time, but it’s definitely something that a landlord’s going to go after.”

Even to Kastanas, the modern leasing agreements are not all bad. In exchange for the percentage, landlords are offering some incentives of their own.

“We’re on very good terms with our landlord and they are doing things that kind of try to make up for it a little bit, like tenant improvement,” the restaurant owner says. “They give you allowances to improve your space. That was a very a good incentive for us to come here.”

Vishal Sanghvi recently opened Café Audire, a listening lounge where people can grab coffee and bring in their own music to play on an old school record player. A software engineer by day, this is his first foray into the restaurant business.

“I have no reference point, so this is all I know,” Sanghvii says. “Ever since I started looking into this stuff, everywhere I went, the whole percentage thing was part of the deal. I think it just comes down to cost of doing business these days.Kastanas says he’s getting used to the new costs and had to adjust his business plan. “It makes you more diligent,” he says. “I had to figure out how we’re gonna pay these things and it affects pricing. It affects everything, it affects what you charge for things.”

For Williams, who was born and raised In Charlotte, the growth has been fun to be a part of. “Charlotte is now on the map and people are making major plays in Charlotte,” he says. “Not just a couple, a lot. It is on a national radar. That message the other day about Charlotte being the number one fastest growing city in the country, that’s the kind of stuff that gets these landlords attention. Charlotte is, from a real estate perspective, certainly on a totally different radar than it was even five years ago.”

Unpretentious People Say...

Other Articles You Might Enjoy