By Zach Giroux for The Island Eye News
Next summer there will be a new waterfront restaurant at the Isle of Palms Marina. The yet to be named dining spot will stand where Morgan Creek Grill was for more than 15 years.
After trying to make ends meet with the city since 2014, Morgan Creek Grill’s lease expired at the end of October.
Efforts were exhausted in September 2018 when the City Council unanimously rejected the restaurant’s proposal for a lease extension, citing that the lease was long overdue for a fair market value assessment.
A year later, after advertising for offers and hearing presentations from several potential buyers, the Council voted to enter into exclusive negotiations in December 2019 with the IOP Families Group, represented by Marina Joint Ventures, Inc. The group consists of the Bushnell and Lorenz families, who have lived on the island for the past 15 years.
On Jan. 16, the property was appraised by Integra Realty Resources for $2,270,000.
In the East Cooper area, the average restaurant is appraised at $24 per square foot, according to broker Jon Chalfie, who is representing the city.
On Nov. 3, the Council unanimously approved a lease agreement on the property with “as is” conditions with new tenants Jon Bushnell and Dave Lorenz and passed the ordinance for the second and final time at a special meeting Nov. 10.
Although the actual name of the restaurant is still to be decided, the ownership noted that it will operate as a fish camp and raw bar. It will be a sit-down, family-friendly, fullservice restaurant and not a counter-service type, according to lease stipulations.
The lease is set to extend for the next 25 years and expire on Jan. 31, 2045. Rent is set to commence on Aug. 1, 2021, with an annual rent of $113,000 at $16.50 per square foot of the 6,000-square-foot building. The base rent will be $100,000 per year through Dec. 31, 2024, and will increase to $120,000 in 2025 and 2% annually thereafter.
Bushnell and Lorenz will invest approximately $2 million on a complete renovation of the building, improved landscaping, enhanced outdoor facilities and the parking lot. The tenant made a personal guarantee ensuring that the city will have an improved building within a 12-month time frame.
The agreement holds that the tenant will be responsible for the capital investment and risk, construction management and ongoing maintenance of the city-owned asset, a true “triple net lease” where the tenant pays for all expenses associated with the property, including structural, regular maintenance, insurance and property taxes.
However, the more successful the restaurant is, the greater the city will capitalize. The city will collect a “percentage rent” over a break point of $5 million for the first 12 years and then $4 million for the remaining 12 years.
For every dollar of the restaurant’s sales over the break point, the city gains an additional 7% in rent, collected quarterly.
The city will also benefit from additional hospitality and business license revenue associated with an operational restaurant.
Renovations will begin on the restaurant through the remainder of this winter and into the spring, with expectations to open year round during the 2021 beach season.