Can food halls become retail’s new anchors?
According to a new report for the retail real estate developer, Cushman & Wakefield, the U.S. will have 300 food halls by 2020, up from 70 currently.
The halls are basically replacing food courts full of ubiquitous chains with a variety of mini-restaurants run by artisanal and local vendors often offering healthier food options. With tenants ranging from food truck operators to celebrity chefs, halls are believed to be particularly appealing to Millennials looking for variety and authentic experiences.
The mall trend is being driven by challenges in apparel retailing, an uptick in mixed-use projects among developers and foodie culture.
Non-food tenants benefit from the traffic. A report from Jones Lang LaSalle further found shoppers who eat at the mall spend an average of 35 extra minutes browsing stores compared to non-eaters.
“Food halls have become a unique and exciting experience, and not something that can be done or experienced online,” SCG Retail Managing Partner David Firestein, told the Commercial Observer. “Previously an afterthought, they are now drivers of shoppers.”
While halls may charge high rent for food purveyors, they typically come with low start-up costs and built-in traffic. And with the small spaces and minimal design requirements, underperformers rotate out easily enough.
With few failures so far, Cushman sees halls extending beyond urban locales with suburban projects being developed at both shopping malls and mixed-use projects as well as opportunities in rural areas.
Critics complain of crowded spaces, long lines, a general lack of ambience and an overload of choices that leads to decision fatigue, according to Eater.
The biggest concern is over-saturation. New York City, for example, has 25 permanent food halls and another 10 more under construction.
A New York Post article earlier this year exploring potential oversaturation cited one developer indicating many food halls in the city aren’t profitable. James Famularo, senior director of retail leasing at Eastern Consolidated, told the Post, “There are way too many of them. Food halls are good for one thing these days — to occupy a space as a placeholder until the landlord finds a higher-paying, more permanent tenant.”
- The Sharing Economy For Restaurants – 2018 Edition – Cushman and Wakefield
- The Country’s Food Hall Appetite Is Growing – Commercial Observer
- One attraction still drawing shoppers to malls: Food – CNBC
- 13 Food Halls That Prove This Trend’s Not Dead Yet – Eater
- Food halls are opening everywhere — and we’re sick of it – New York Post
- The Inflated Promise of the American Food Hall – New Yorker
DISCUSSION QUESTIONS: Do see the food hall phenomenon offering positive benefits to retail, or are they simply temporary “placeholders” for more valuable tenants? Will food halls become critical retail traffic drivers in suburban and rural areas?