The economic recovery and shifting consumer habits have driven significant gains in the restaurant sector, aiding in the leasing of retail space around the nation. According to the CBRE research report “Restaurants: Now Serving Retail Growth,” which explores emerging trends in the restaurant sector, restaurants accounted for approximately 15% of all retail spending in the first quarter of the year (excluding spending on motor vehicles and parts). The sector 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. This has caught the eye of landlords, who are eager to attract the best restaurants and concepts to their retail space.
One such concept, food and market halls, which have existed for centuries, has experienced a revival in the U.S., and especially in the New York region, over the past few years. The newer versions of these halls have expanded the concept, featuring more upscale dining options, from grab-and-go to full-service restaurants. Expansive spaces such as Eataly, Le District, Todd English Food Hall in the Plaza and others have replaced multi-vendor platforms with a centrally owned and managed operation. Food halls appeal to consumers’ demand for fresh experiences offering a range of choices.
In the U.S., 13 major food halls opened in 2015, with an anticipated 14 slated to open this year, an indication that this is a strengthening trend.
In the fall of 2015, after being vacant for nearly two years, UrbanSpace Vanderbilt at 230 Park Avenue, welcomed its first customers. The 12,000 square foot hall occupies the ground floor tower and brings together 23 vendors, including spots offering hot dogs with Asian-inspired toppings, Thai street food, artisanal fried chicken, Fany Gerson’s beloved “Dough” doughnut shop and Red Hook Lobster, small batch coffee maker and others. The market is located at the corner of Vanderbilt Avenue and 45th street, strategically convenient to Grand Central Station.
Last spring, Great Northern Food Hall opened in Vanderbilt Hall at Grand Central Terminal. The 5,000 square foot food hall, created by Danish restaurateur and Norma co-founder Claus Meyer, features six vendors carrying over 100 different seasonal dishes, with an upscale sit-down restaurant known as Agern.
Millions of dollars were spent by Brookfield to convert the former World Financial Center to the 21st Century Brookfield Place. In addition to extensive renovations of the office buildings and retail space in Battery Park City, the developer created Hudson Eats, the All Star Food Hall. The hall opened in June 2014, providing approximately 600 communal seats and kiosks which include Black Seed Bagel, Sprinkles Cupcakes, Mighty Quinn’s Barbecue, Umami Burger, Blue Ribbon Sushi, and other fine restaurants. Later this year, Starbucks Coffee will be opening a 3,500 square foot store on the second floor of the complex, near the Goldman Sachs headquarters, featuring a Reserve Bar, which will serve its “line of small-lot, limited availability coffees from around the world.”
In the winter of 2013, the Gotham Organization opened Gotham West Towers, a 1,238 unit residential rental tower on 11th Avenue between 44th and 45th Street. As the apartments neared completion, the developer sought an innovative retail use for the 10,000 square foot ground floor, deciding finally to open a market which would succeed as a business and provide a satisfying experience to guests in Hell’s Kitchen. The market has been a great success, currently open seven days a week until 11 or midnight.
A second outpost of Gotham West Market will be opening in the fall in the newly completed luxury residential apartment building at 250 Ashland Place near the Brooklyn Academy of Music and Barclay’s Center in Downtown Brooklyn. The 16,000 square foot food hall will feature permanent food and drink vendors and will include a pop-up spot for use by local chefs and restaurants throughout the year. Featured food vendors will include Mu Ramen, Apizza Regionale and Flip Bird.
This location is a short walk from DeKalb Market at City Point, the mixed-use retail and residential complex expected to open in the fall. The complex which will feature a Target, an Alamo Drafthouse Cinema, and a Century 21 department store, will include a 26,000 square foot food hall at 1-7 DeKalb Avenue. The food hall will feature the first outpost of Katz' Deli from the Lower East Side along with 55 vendors from around the five boroughs, each a personalized food stall.
Two former retail book stores have been retrofitted and converted into food halls. The Pensy, located at the site of the former Borders Books at 2 Pennsylvania Plaza, on the southwest corner of 33rd Street and 7th Avenue, is one of Midtown Manhattan’s newest food halls offering upscale, yet casual, chef-driven restaurant concepts. The 8,000 square foot space, home to five distinct food stars, a cocktail bar and coffee bar, and ample outdoor and indoor seating, is located right at the entrance of Madison Square Garden and steps away from Pennsylvania Station.
The Barnes & Noble former flagship location at 105 Fifth Avenue (also 5 East 17th Street) shuttered in 2014, leaving vacant a 25,000 square foot store. During the months of May and June, the facility was transformed into an industrial chic restaurant and gastro hall, bakery, wine bar and food complex.
As CBRE reported in its study, “These food halls are well positioned to capture the nation’s evolving consumer base. They provide large and diverse choices in both cuisines and price points that enable access to a wide range of ages and incomes. Second, they represent a fairly adaptable format that enables operators and owners to easily swap tenants and food options to meet evolving consumer tastes. Third, they can fill spaces ranging in size from 5,000 sq. ft. to more than 50,000 sq. ft. and can therefore fit a range of real estate options as spaces become available.”