Food Halls: What’s on the Menu for Real Estate Developers?

Food Halls: What’s on the Menu for Real Estate Developers?

Since Development magazine first reported on the growing trend in food halls in 2017, these eateries have bloomed into a thriving concept offering developers a menu of options to apply to aging malls, student housing, new and existing mixed-use developments and even tired rest stops along America’s interstates.

What makes an eating establishment a food hall, one of the hottest eating places of the 21st century, rather than a food court, one of the most discredited concepts in 20th century dining? A food hall is hip and draws traffic — lots of it. It is usually in a large undefined space, filled with vendors offering delicious local food concepts with tasteful, modern furnishings. The food court typically offers fast food vendors and plastic tables and chairs.

Although the concept is not new [Boston’s Quincy Market has hosted food merchants since 1742], it is growing quickly in its modern form. Cushman & Wakefield’s (C&W) 2019 report, “Food Halls 3.0 The Evolution Continues,” notes that when the firm first started tracking food halls in 2016, there were about 120 projects across the U.S. C&W projects a total of 450 food halls by the end of 2020. JLL, in an article titled “Modern-day food halls: The heart (and stomach) of the new economy,” suggests that the “modern-day food hall represents an entirely new way for commercial landlords to utilize existing space and a lower-cost operating model with today’s most innovative chefs.”

And Arturo Mei, who pioneered Asian-themed food halls in the Washington, D.C., area, gave developers a glimpse of the appeal of these properties in a Q&A with Washingtonian magazine in August.

“They (up-and-coming chefs) don’t have to save $300,000 or $400,000 to open a restaurant,” he said. “And the permitting is a lot faster.”

WD Partners undertook a major study titled “Apocalypse to Relevance” seeking to discover what would make shopping malls relevant to today’s consumers. The company offered 11 different concepts, and food halls, farmer’s markets and grocery were the top three picks of those polled. The so-called digital natives, those brought up during the computer age, selected food halls by a wide margin.

Food halls have been a hip phenomenon in top-tier cities for a number of years, but now the concept is spreading to smaller metro areas around the U.S. For example, residents of Omaha can delight their “inner foodie” at Inner Rail, a new indoor and outdoor food hall at Aksarben Village, a large mixed-use development in the city.

Even in its infancy, there is a growing diversity of food hall concepts that can fit into various real estate scenarios. Here are a few that are growing in popularity:

Food hall/local craft breweries. The mix of food hall and craft beer is catching on, but there are still plenty of breweries to go around for developers who want to tap into this concept. According to the Brewers Association, in 2014 there were 3,814 craft breweries in the U.S.; by 2018, the number had jumped to 7,346. One example of a mixed-use project with food hall/craft breweries is Waterstone Properties’ project, Rock Row,  in suburban Portland, Maine. The project, which is under development, will feature 450,000 square feet of retail; a 25,000-square-foot “brewplex” and food hall; an 8,200-square-foot concert venue; 26 acres for recreation; 80,000 square feet of grocery; a 12-screen movie theater; 100,000 square feet of medical office and wellness facilities; 750 residential units; and 300,000 square feet of loft and Class A office space.

College/open-to-the-public food hall. Another concept that could hit big is the college-campus food hall that is open to everyone. The University of Pennsylvania in Philadelphia recently opened Franklin’s Table. The 8,000-square-foot food hall in the heart of campus serves students and the general public.

Single-cuisine food hall. The food hall does not need to be a mix of various cuisines. How about one dedicated to Japanese, Chinese or Italian cuisine? A prime example is Eataly in New York City’s Flatiron Building. It offers Italian cuisine, coffee shops, a market and a cooking school. There is another New York location of Eataly, and cities such as Chicago, Boston, Los Angeles and Las Vegas have outlets as well.

Food hall on the interstate. A welcome concept for all weary travelers of America’s interstate highway system is the roadside food hall. It is in its infancy, but an example of this is the 40,000-square-foot Oxbow Public Market in Napa, California, for travelers who have spent the day touring the state’s wine country.

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