Second-Generation Restaurant Space Is In Demand. Here’s A Sampling Of What’s Available.

As the Sacramento region’s culinary scene continues to evolve, new eateries are looking to join established restaurant operators.

But they often face challenges in finding the right real estate, with the hottest commodity being second-generation restaurant space.

“Because of the heavy investment that restaurants require, second-generation spaces, which are those that were previously occupied by a restaurant and have seen investments and improvements made, are far more in demand than shell space,” said Scott Kingston, a broker with Turton Commercial Real Estate. “At that point, the criteria becomes location and size.”

Quality spots can be hard to find, as many of the most sought-after spaces are claimed before they make it to the market.

Mark Engemann, a broker with Colliers, said Placer County is likely the area’s strongest market, particularly Roseville, in that available second-generation spaces don’t remain on the market for long. Elk Grove is another local market that lacks available inventory, he said.

“What we are seeing is that these high-quality locations are hard to find and are definitely retaining their value,” Engemann said. “Secondary locations are much easier to find and are more negotiable, but the problem is, in an already tough industry with low margins, it’s hard to be profitable when you operate on a mediocre site.”

In Sacramento, Kingston said the hottest markets include Midtown, East Sacramento and the R Street Corridor.

“Most modern restaurants, whether they are local operators or national chains, the size of a space they are looking for has shrunk because it’s more risk averse,” Kingston said. “Where in the past they might’ve been looking for something anywhere from 5,000 to 8,000 square feet, most are now saying they want 2,000 to 3,000 square feet, along with other things like a good-sized patio and dedicated food delivery parking stalls.”

His advice: Restaurateurs looking to expand or enter the market should work closely with local brokers to identify sites, especially those that have yet to hit the market.

The following is a sampling of some notable second-generation restaurant spaces available around the area based on information gathered by the Sacramento Business Journal.

Former Club Pheasant

Address: 2525 Jefferson Blvd., West Sacramento

Size: 9,187 square feet across two buildings

Owner: City of West Sacramento

On the market: Since early February

Listing agency: Turton Commercial Real Estate (Ken Turton, Scott Kingston, Kimio Bazett)

Sale price: $3.2 million

Notable: The former tenant occupied the building, built in 1912, for 87 years prior to its closure in 2022. The city purchased the property that year for $3.4 million and is open to an incoming user that provides a community benefit, which could include reuse or development of the site.

Former Mexico Lindo (Roseville)

Address: 1410 E. Roseville Parkway, Suite 140, Roseville

Size: 4,200 square feet

Owner: Stefan Manolakas

On the market: Since early March

Listing agency: Property Manager Terri Clark Dougan with Network Commercial Management

Leasing rate: $2.85 per square foot plus triple-net costs, which generally include expenses associated with a property, such as taxes, maintenance and insurance.

Notable: The space was recently refurbished and includes all existing furniture, fixtures and equipment. The back of house has not been refurbished. The restaurant space includes a 1,200-square-foot patio space for additional seating.

Former El Santo Restaurant & Ultralounge

Address: 1000 K St., Sacramento

Size: 7,800 square feet

Owner: BRAD Management

On the market: One year

Listing agency: Turton Commercial Real Estate (Scott Kingston and Matt Axford)

Leasing rate: $2.75 per square foot plus triple-net costs. Also for sale at $7.5 million.

Notable: The Downtown Sacramento space is in an area with high nighttime foot traffic. The space is considered turnkey and comes with certain furniture, fixtures and equipment.

Former The Kitchen location

Address: 2225 Hurley Way, Arden-Arcade

Size: 4,400 square feet

Owner: Fortune Investment Partner LLC, according to Reonomy

On the market: Since April 2023

Listing agency: Mueller Commercial Real Estate Team at Century 21 Select Real Estate Inc. (Daniel Mueller)

Leasing rate: $2.50 per square foot plus triple-net costs.

Notable: The space was most recently occupied by Michelin-starred The Kitchen, which relocated to Broadway last summer. The Arden-Arcade location includes multiple hood systems, a wine cooler, internal fireplace and other infrastructure making it a turnkey opportunity. Listing agent Daniel Mueller said the main challenge in leasing the space has been its size, as most groups are looking for spaces between 1,200 square feet and 2,000 square feet. An approximately 1,600-square-foot retail space next door is also available for lease.

Former Chando’s Cantina

Address: 805 15th St., Sacramento

Size: 7,816 square feet

Owner: Bill Kufasimes

On the market: Since early February

Listing agency: Marcus & Millichap (Dominic Mazzoni and Edward Nelson)

Leasing rate: $1.60 per square foot plus triple-net costs. Also for sale at $1.915 million.

Notable: The space is next to the Governor’s Mansion State Historic Park and across the street from a five-story, 186-unit apartment project. Entertainment venues such as the UC Davis Health Pavilion and Sacramento Memorial Auditorium are also nearby.

Former P.F. Chang’s

Address: 1530 J St., Sacramento

Size: 6,000 square feet (can be split into two 3,000-square-foot spaces)

Owner: Mark Friedman and Mike Heller

On the market: One year

Listing agency: Turton Commercial Real Estate (Scott Kingston)

Leasing rate: $3 per square foot plus triple-net costs.

Notable: The space is situated on the corner of J and 16th streets, one of the busiest intersections in the central city. The space includes certain kitchen equipment such as a hood shaft and grease trap. It was last occupied by P.F. Chang’s, which closed in 2020.

Former Mariachi Mexican Bar & Grill

Address: 400 Iron Point Road, Folsom

Size: 5,200 square feet

Owner: Iron Point Investments LLC

On the market: Six months

Listing agency: Colliers (Mark Engemann)

Leasing rate: $2 per square foot plus triple-net costs. Also for sale at $2.5 million.

Notable: The property is located just south of the Folsom Premium Outlets and includes an outdoor dining patio. The area has seen traffic decrease in recent years as more of the city’s retail activity has shifted to East Bidwell Street near Highway 50.

Former Odd Cookie Bakery Cafe & Bar

Address: 1015 Ninth St., Sacramento

Size: 4,100 square feet

Owner: Shigetoshi Family

On the market: Two years

Listing agency: Turton Commercial Real Estate (Scott Kingston and Kimio Bazett)

Leasing rate: $1 per square foot plus triple-net costs. Also for sale at $1.49 million.

Notable: Turnkey restaurant opportunity with certain furniture, fixtures and equipment in place. The building includes a 615-square-foot mezzanine and full basement.

Former Cicada Cantina

Address: 9105 W. Stockton Blvd., Elk Grove

Size: 8,550 square feet

Owner: Pappas Investments

On the market: About a year

Listing agency: Pappas Investments (Kelly Rule)

Leasing rate: Negotiable

Notable: The space, located within the Home Depot and Best Buy-anchored Laguna Gateway center, benefits from ideal visibility from Highway 99. The freestanding building also includes an outdoor dining area.

Former Biba Restaurant

Address: 2801 Capitol Ave., Sacramento

Size: 2,500 square feet (total of 16,934 retail square footage available in building)

Owner: Sutter Health, JCG Development, and Hattie’s House

History: Last occupied by Biba Restaurant, which closed in 2020 after 33 years in business.

Listing agency: Turton Commercial Real Estate (Scott Kingston and Kimio Bazett)

Leasing rate: $3 per square foot plus triple-net costs.

Notable: The owners of the building have announced renovation plans in recent years to update the ground-floor retail and restaurant spaces and basement, and convert the former office space into apartments on three upper floors.

Former Mexico Lindo (El Dorado Hills)

Address: 3375 Bass Lake Road, El Dorado Hills

Size: 3,590 square feet

Owner: Pappas Investments

On the market: Since December

Listing agency: Pappas Investments (Kelly Rule)

Leasing rate: $3.75 per square foot plus triple-net costs.

Notable: The restaurant space sits on the corner of Sienna Ridge and Bass Lake roads in the Safeway-anchored Sienna Ridge center. The unit includes certain furniture, fixtures, and equipment such as a hood system and tables and chairs, and features an outdoor patio.

Former Good News Wine

Address: 1050 20th St., Sacramento

Size: 2,400 square feet

Owner: Mark Friedman and Mike Heller

On the market: Since mid-February

Listing agency: Turton Commercial Real Estate (Scott Kingston)

Leasing rate: $3.25 per square foot plus triple-net costs.

Notable: The space is located in Midtown’s MARRS Building, which includes other businesses such as LowBrau, Holy Spirits, Azul Mexican Food & Tequila Bar and the Sacramento Comedy Spot. The Midtown Farmers Market is held weekly in front of the building.

Former China Star Buffet

Address: 2204 Sunrise Blvd., Rancho Cordova

Size: 5,473 square feet

Owner: J&P Properties

On the market: Several years

Listing agency: Colliers (Mark Engemann)

Leasing rate: $1.50 per square foot plus triple-net costs.

Notable: The restaurant space in the Sunriver Village center is near Sunrise Boulevard, which sees more than 80,000 vehicles per day, according to broker Mark Engemann. The space will require interior improvements from an incoming operator and lacks optimal visibility from the street due to being below grade.