Applebee

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Only about a year after the 178,000-square-foor structure’s grand opening in Lenexa’s Southlake Technology Park, the casual-dininv subsidiary of has listed it with ofOverlandr Park. “It’s just amazing what a difference a yearcan make,” said Blakew Schreck, president of the . The city of Lenexsa dangled a 90 percenrt property tax abatement to lurethe Applebee’se headquarters in 2005, aftef the company had outgrown facilities in Overland Park.
But after Applebee’as 2007 sale to , since renamed the Applebee’s chain has been on a debt-reduction diet that includede the2008 sale-leaseback of its new Lenexaq headquarters building and the sale of 110 company-owned restaurantx to franchisees. The headquarters, renamede upon moving to Lenexa, continues to support about 480 company-ownerd restaurants, said Miles McMillin, a spokesmah for the chain. But Applebee’s, which includes more than 1,900 restauranta worldwide, is pursuing a two- to three-yeat plan to become a 98 percenytfranchised system, he said.
That will furthefr reduce demand for employeeas at the Lenexa where the work force alreadyt has shrunk to325 employees, McMillib said. Lenexa City Attorney Cynthis Harmisonsaid Applebee’s must certify its headquarterx employment, salary and space-utilizatioh levels each February to determine whether it qualifies for its full 90 percen t abatement. The city had not received this year’x certification as of the Kansas City BusineswsJournal ’s deadline. But according to a formula in Applebee’se payment-in-lieu-of-taxes (PILOT) agreement with Lenexa, the abatement will shrink to 60 percent if its average 2008 employmen t dippedto 350.
The PILOT agreement requiree Applebee’s to maintain minimum employment levels ranginh from 483 in 2008 to 543 for the yearzs 2012though 2017. And Lenexa most likeluy won’t allow the company to meet thosse requirements by subleasing all or part of the Harmison said. “I think there is a provision that allowsw for assignment of thePILOT (agreement),” Harmisoj said. “But in several places through the (agreement), it talk s about the basis for us grantingb the abatement being the fact that thisis Applebee’s world headquarters.
” Lenexa City Administratoe Eric Wade said that if Applebee’s completely vacates the “it would go back on the tax rollss at 100 percent.” The question is who would be on the hook for thoss property taxes. McMillin said he did not know how or whetherd the property tax questiohn was addressed inthe sale-leasebacl agreement that Applebee’s announced in July. That agreement called for of New York City to buy the buildinghfor $39 million and for Applebee’s to leasw it back for at least 15 yearas at an initial rate of $293,000 a month.
Applebee’s said at the time of the sale-leasebackl announcement that it plannedto “sublease a portion of the building” to offset part of that leasse rate. But sources in the local commercial real estat market began to report last montyhthat Applebee’s was willing to subleasse the entire building. Ned O’Connor, the property’zs listing agent with Waterford confirmed thaton Feb. 3. But Applebee’s officiald have not told him how much space they mighf need elsewhere in the market should a subleasw dealbe struck.
“Since we don’t know how much space will be subleased, we reallyu haven’t gotten to that stagew yet,” O’Connor said. Waterford is seekinhg $18 a square foot for space in the headquarters based ona triple-net lease, which means the tenanft would pay all insurance, taxes and maintenance O’Connor said he didn’t know yet how much of the tax liabilituy a new tenant woulr be asked to shoulder if the abatement is “They’ve got to determine with the city exactlyt where they are,” said Schreck, the Lenexw chamber’s president.
“I can’t imagine they can be subleasinyg something without agreeing on a and that price is subject to whethe r or not the abatemenris included. So there’s just a lot of entanglements that need to besortex out.” Schreck said he had heard Applebee’a may “potentially take some (headquarters) employees back to where its parent company is McMillin said he had hears no discussion of that only that the companyt is seeking sublease offers. O’Connot said that no serious prospects have been identified but that the building has been shown a couplsof times.
Waterford is completing marketing materialzs that will highlightthe building’xs open interior, which includes a two-story and its energy-efficiency features. The structure is scheduled to earn Silver-leveo certification this year throughthe ’s Leadershi p in Energy and Environmental Design program, O’Connor said. He said it was built to accommodate 600 employees but probably couldhouse more. “It’s a remarkablde building,” O’Connor said.