CBRE Viewpoint Restaurants: Now Serving Up Retail Growth

Consumer Restaurant expenditureCBRE has released a report exploring the recent rise and future growth potential of restaurants in the US retail real estate.

With economic recovery and shifting consumer habits driving significant gains in the restaurant sector, restaurants accounted for approximately 15% of all retail spending in Q1 2016 (excluding motor vehicles and parts). The secotr reached a milestone in 2015 when the U.S. Census Bureau reported that restaurant industry sales surpassed grocer sales for the first time in history. And the gap is expected to increase.

This has caught the eye of retail landlords, who want to shift tenant mix from low-growth categories vulnerable to e-commerce towards the traffic drivers of services and experience. The result is the proliferation of new and existing restaurants taking up more an dmore retail real estate, as landlords scramble to attract the best restaurant tenants to their properties – a veritable food and beverage frenzy.

What is driving this restaurant growth and how long will it last? How can retail landlords benefit today and in the future?

The report analyzes the sectors key growth drivers and the retail real estate opportunities.

Key Highlights the report:

  • 4 “hot” concepts explored: food trucks, food halls, celebrity chef restaurants, and grocers (“grocerants”)
  • Restaurant sales growth has surpassed all other core retail categories since the recession (+20 percent between 2012 and 2015 alone)
  • San Francisco, Washington, D.C., and Dallas / Fort Worth rank highest in per capita restaurant spending.
  • Other secondary markets positioned for rapid growth include Denver, Baltimore and Philadelphia.
  • New lease structures: Restaurants, especially newer and local concepts, come with more credit risk relative to other categories. Landlords are finding creative ways of structuring leases to mitigate that risk, including equity partnerships, percentage rent and shorter-term agreements.

To see the full report click here: ViewPoint_Now_Serving_Retail_Growth