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Food Halls, a Hot Real-Estate Investment, Conquer the Suburbs
Food Halls, a Hot Real-Estate Investment, Conquer the Suburbs
Oct. 23, 2023
By Kate King
Read More: https://www.wsj.com/real-estate/comm...=hp_lead_pos10
Quote:
Food halls, once a staple primarily of big cities, are rapidly multiplying in the suburbs as developers aim to capitalize on the rise of hybrid work and foodie culture. These collections of small restaurants typically have shared seating and offer a variety of gourmet and ethnically diverse cuisines. They target customers who are willing to spend $15 on an artisanal sandwich or want a meal from West Africa or one inspired by Asian open-air markets. In contrast to food courts in highway rest stops or older shopping malls, food-hall operators generally avoid national fast-food chains and waffle-chair seating. Food halls favor local restaurateurs, craft beer and modern décor.
- The U.S. has at least 364 food halls, and more than 120 are expected to open by the end of next year, according to real-estate firm Cushman & Wakefield’s Colicchio Consulting Group, which specializes in food-hall development. That is more than 10 times the number of food halls that were open a decade ago, when 35 operated nationwide. A large chunk of those were in New York City and catered to tourists or office workers.Today, they are scattered everywhere. A food hall in Omaha, Neb., features Nepalese street cuisine and Syrian fare. Another in Grapevine, Texas, is designed to look like a rail station and sells arepas and brisket, as well as seafood and hummus dips. The Reno Public Market food hall in Nevada has vendors selling churros, crepes and Salvadoran pupusas. In the tiny town of Selma, N.C., a food hall opened last year at Exit 97 off Interstate 95. Restaurants include the Indian offering Curry in a Hurry and Chios, which serves Peruvian cuisine.
- The pandemic has fueled food-hall expansion, said Trip Schneck, executive managing director at Cushman & Wakefield. These dining venues weathered the pandemic’s upheaval better than the broader restaurant industry, he said, with only a couple dozen closing since 2020. As people left major cities and spent more time working from home, demand for food halls picked up in the suburbs. “The suburban market always had the nighttime population,” Schneck said. “Now they’ve got that daytime population.” --- This is the case in Roswell, Ga., an affluent Atlanta suburb where new office, retail and high-end restaurants have opened in recent years. The pandemic accelerated residents’ desire to spend more time closer to home, said Will Colley, managing director of Polara Capital, a private-equity and real-estate firm.
- For food halls to succeed, they need a popular bar and events such as live music or trivia nights that attract customers beyond the lunch crowd. “If you leave it at nine-to-five, you’re not going to be happy with the results,” said Phil Colicchio of Cushman & Wakefield. Not everyone is enamored by food halls. Keith Durst, owner of the hospitality advisory firm Friend of Chef, said the eclectic and casual nature of food halls can leave the space feeling impersonal and quickly worn out. Durst said most diners also prefer table service when they go out for dinner. “I think hospitality is important and it gets lost in those environments,” he said. --- Food halls are also a significant upfront investment for owners, who build out the small kitchens and buy the equipment used by each food vendor. At the Old North State Food Hall off I-95 in North Carolina, owner TEC Food Hall also pays for utilities and maintenance, said Managing Partner Kevin Dougherty.
- In New York City, food halls have been part of the landscape for years. Chelsea Market has been operating on the west side of Manhattan since 1997. The Italian food hall Eataly first opened near Madison Square Park in 2010 and later added a second location in the Flatiron district. --- New ones are still popping up. In Midtown, office landlord BXP opened a food hall called the Hugh in the base of one of its buildings on East 53rd St. in late 2021. BXP selected local food vendors with the goal of representing New York’s diverse cuisine scene, said Hilary Spann, executive vice president for the New York region. Customers can order Pakistani spiced lamb chops, savor Jamaican oxtail stew or snack on Korean pork belly buns. --- On a recent Wednesday evening, the Hugh was humming with office workers in suits, teenagers with backpacks on their laps, and other passersby. Patti Grzybowski, 62 years old, stopped in after a doctor’s appointment nearby and spent $20 for a taco, truffle fries and a glass of prosecco.
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