According to the firm’s “Now Serving Retail Growth” report, restaurants are now dominating retail to account for 15% of all sales.The increased desire for experiences as opposed to simply just shopping at retail centers has been well documented, and a new report from CBRE confirms that it’s more than just a fad.
The report confirms what has been a frequent topic of conversation of late: restaurant sales are trending upwards, while department store sales are falling. We can take that a step forward to say that food-anchored centers - think of all the exciting new mixed-use developments that feature a grocery store as the anchor - are thriving, and centers that are anchored by department stores are viewed as relics of the past. Department stores themselves are fully aware of the trend, and some of the larger names are shuttering unprofitable locations and focusing their efforts on their still-relevant stores in well-trafficked retail centers.
CBRE says that while the trend is now apparent, the ball is also firmly in the court of landlords and developers for which shape the continued growth will take.
“Landlords have dark anchors and space to fill, so they are able to take some risks and experiment with new dining concepts,” says David Orkin, CBRE’s restaurant practice leader.
While centers will want to ride the wave of the trend, they must be aware of potential pitfalls.
“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?” he says.
CBRE also makes note of two trends that are gaining traction and worth monitoring. Food halls, such as Reading Terminal Market in Philadelphia, which feature several restaurants and grocers in sort of a town square environment under one roof, are proving to be quite popular in the markets that can support them.
“It can be done, though. 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,” Orkin says.
The second trend is referred to as ‘grocerants,’ which are grocery stores that also offer eat-in and takeout dining options.
“Grocerants are something landlords have to be open to, probably in smaller formats. Grocery stores have great credit and increase the value of properties,” says Melinda Cordero, CBRE’s head of retail research.