It’s a scene that’s played out across cities around the world. Stores, restaurants and other retail establishments are shuttering, collapsing under the weight of online shopping and its spawn; the on-demand economy. People now want, if not expect, to purchase a shirt, a book, or even a television with a few clicks, and have it delivered right away.
Yet there are two things the Internet doesn’t offer: community and, in the words of food hall guru Phil Colicchio, you can’t eat it. The need for those feel-good provisions, combined with the frequent closure of restaurants and the rise of cafes, where people sit for hours, has led to not just the creation of food halls, but an explosion of such properties.
“In 2015, when we first began tracking food halls in the United States, we counted 70 that were open and operating,” according to Colicchio, food and beverage consultant, Americas retail services, Cushman & Wakefield. “Today, our data reports over 200 food halls in operation in the United States, and over 150 are planned or in-development.”
Different from food courts, which were created at malls decades ago for shoppers to grab a quick bite, food halls are designed for lingering and repeat customers. Community tables invite dining mixed with talking, and the selection of well known local chefs and artisans encourages guests to try different purveyors.
Further, said Colicchio, developers are now starting such projects off with performance space. “Think of concerts, comedy shows, and local artisans using the food hall as a venue for their talents. The food hall is no longer just a place to eat, it’s a place to experience.”
That vibe is making such complexes popular with residents of multifamily buildings and office building dwellers. Additionally, landlords covet them for their promise of stability over free-standing restaurants.
Large format food halls have space requirements comparable to department stores, which are shuttering.Martin Barry, founder and CEO of Manifesto Market
“Asset owners are facing a paradigm shift in retail leasing,” declared Martin Barry, founder and CEO of Manifesto Market, which has two locations including one in Prague and is slated to come to locations throughout the United States, Europe and Asia. “Large format food halls have space requirements comparable to department stores, which are shuttering.”
Added Dan Warne, CEO and founder of Sessions Market, which is developing The Shelter Hall, in Brighton, England, “Millennials and Gen-Zers take a different approach to the way they live, eat, shop and socialize, and people now favor venues offering on-demand experiences for a variety of tastes in cuisines, with the flexibility to fit their lifestyle.”
Colicchio, who’s worked on a host of such projects, agreed. “It is a terrific hedge for space. If you have 7,000 to 8,000 square feet for a food and beverage option, a restaurant is looking at a 20 percent to 23 percent failure rate in a year, and 30 percent in five years. There’s nothing remotely like that in food halls because if you have a dozen independent operators, one or two will struggle but you just have to transition that 200 or so square feet into another vendor and the food hall continues to operate.”
Further, he noted, “If a food hall is programmed correctly, an owner will know well in advance if a vendor isn’t going to make it because that landlord has hourly access to sales.” Property owners of freestanding restaurants can’t get such data without reporting by the tenant, Colicchio explained, while food hall landlords own vendors’ point of sale systems.
Variety among vendors also is helpful, said Barry. “The more that a food hall has diverse options and refined culinary concepts, the more landlords can mitigate risks.”
Along those lines, Warne has grand ambitions. “For our food hall to be successful, it must represent a microcosm of the local community. We see it being far more than a simple dining out destination, but more a place with a theatrical sense of occasion that references everything that has built Brighton over the past 1,000 years.”
It’s not about consumption, we believe that people value their time and want to create sensorial experiences with it.Dan Warne, CEO and founder of Sessions Market
He continued, “we’ll offer a continual schedule of pop-up events and exhibitions that focus on showcasing Brighton talent. It’s not about consumption, we believe that people value their time and want to create sensorial experiences with it.”
Still, landlords need to exercise caution. “Operating a food hall or leasing space to one is not a sure bet for landlords,” asserted Barry. “The setup and operating costs, in addition to marketing, are substantial. We have a huge space requirement for logistics, back-of-house and ventilation, which makes it difficult for both sides to lease for retail level rents. Finding experienced operators helps mitigate those issues.”
The rewards of food halls outweigh the risks, Colicchio stated. “Whether there’s a mixed-use space, retail, an office building or even student housing, the need for amenities that are current or forward-thinking has never been greater.”