Report: Centers must consider new dining formats and leasing deals
Restaurants now dominate retail for 15% of all sales, a point ahead of grocery for the top area of expenditure. Now it’s time for the special conditions of retail leasing to dominate the minds of shopping centers owners and managers, according to CBRE experts.
“They have to be more cognizant of considerations in doing leasing for restaurants. Can centers accommodate the parking and the sewer systems needed by restaurants?” posed David Orkin, CBRE’s restaurant practice leader, in discussing the company’s soon to be released report “Now Serving Retail Growth.”
A chart in the report showing restaurant sales trending upward and department store trending downward illustrates the challenge for shopping centers. “Landlords have dark anchors and space to fill, so they are able to take some risks and experiment with new dining concepts,” Orkin told Chain Store Age.
One of the formats worthy of experimentation, according to the report, are food halls that take a cue from Faneuil Hall in Boston or Reading Terminal market in Philadelphia. The problem for traditional malls is that these agglomerations of food providers demand high-density traffic areas to perform.
“It can be done, though,” said Orkin. “In southern California, in places like Costa Mesa and Santa Ana, there are suburban-oriented food halls incorporated into shopping centers as part of the entertainment component.”
Two other dining formats presenting themselves as options to center owners are food trucks and so-called “grocerants” — grocery stores with eat-in and takeout dining operations.
“Grocerants are something landlords have to be open to, probably in smaller formats,” said Melina Cordero, CBRE’s head of retail research. “Grocery stores have great credit and increase the value of properties.”
CBRE’s report points out that it’s not just Millennial foodies driving restaurant business in shopping centers, but also Baby Boomers with time on their hands and money in their pockets.
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