CW Retail - Food Halls Report

FOOD HALLS OF AMERICA

roughly 1.9 msf of space. As of Q3 2016, there were 96 major food hall projects in the U.S., totaling just over 2.4 msf. In a span of just nine months, 26 new projects comprising 503,000 sf were delivered. Assuming projects currently under construction and slated for Q4 2016 completion are delivered on time, the U.S. will close 2016 with a total of 35 new food hall projects totaling approximately 771,000 sf of new space. Cushman & Wakefield is tracking 18 proj- ects currently under construction (654,000 sf), nine of which are slated for delivery before the end of 2016. Another 28 projects are in the planning phase. These additional projects will likely add over 908,000 sf of additional food hall space to the market through 2019. That could just be the beginning. New proposed projects are being added at the rate of nearly one per week. Additionally, our data gathering revealed multiple projects being considered to which devel- opers are seriously contemplating adding food hall components. Note that these developers were not yet comfortable announcing their intentions. Most of them are urban, high-rise office or residential projects where developers are weighing

the addition of smaller (“bite-size”) food halls as ground floor retail amenities. We also came across a few larger food halls in projects where details were still being worked out or where developers again did not feel ready to make announcements. In total, there are roughly 15 such projects, most of which will likely go forward, and that could add another 400,000 sf of food hall space to the mix.

The food hall as anchor mall tenant is not only already a reality, but one that will be with us for years to come.

We fully anticipate that the food hall development pipeline will continue to expand heading into 2017 and beyond. While we expect to see continued growth from full-sized food halls and some of the mega-sized, single-purveyor models like Eataly, this trend will also increasingly be driven by mini-food halls. These projects of 10,000 sf or less are increasingly emerging as the “go to” retail amenity of choice for new urban high-rise office and/or multifamily development. Yet with so much growth attached to the concept of food halls, the question must be asked, “Can the marketplace support this level of growth?” For now, we would argue that the answer is yes, with some caveats. Those caveats come down to the two issues that we see as critical to the success of any new food hall project; quality and location.

CUSHMAN & WAKEFIELD

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