CW Retail - Food Halls Report

Occupancy growth in the post-recession era has been all about two factors; economics and eCommerce.

The Rise of Food Retail There are plenty of reasons for the surging popularity of food halls in the U.S. but let’s start with the most basic one: Americans are eating out more than ever before. The Commerce Department and the U.S. De- partment of Agriculture report on monthly food sales in the U.S. in two categories; food expenditures at home and food expenditures away from home. These essentially break out as grocery vs. restaurant sales. The good news for both grocery stores and restaurant concepts is that overall numbers have been consistently increasing since 2010 at a rate of 5.9% annually. Between 2014 and 2015 both concepts grew at a rate

(whether from pure-play online retailers like Amazon or bricks-and-mortar retailers growing their omnichannel presence) have been the primary driving force behind this wave of consolidation. This trend is unlikely to end any time soon. Still, despite these challenges overall shopping center vacancy has actually continued to trend downward. Overall shopping center vacancy in the U.S. was 7.4% at the end of Q3 2016, down from 7.5% three months earlier and down from 7.8% at the close of Q3 2015. The expan- sion of food-related retail concepts, from grocery stores to restaurants, is one of the reasons why.

eCommerce Sales as a Percentage of GAFO are Significant

40.0%

$200,000

35.0%

$180,000

eCommerce Accounts for 28.2% of GAFO Sales

30.0%

$160,000

25.0%

$140,000

20.0%

$120,000

15.0%

$100,000

10.0%

$80,000

5.0%

$60,000

$200,000

40.0% 1-Aug-16

1-Aug-06

1-Aug-07

1-Aug-08

1-Aug-09

1-Aug-10

1-Aug-11

1-Aug-12

1-Aug-13

1-Aug-14

1-Aug-15

Retail Sales: GAFO, ($Mil.)

eCommerce Share

$180,000

35.0%

U.S. Department of Commerce

Food Halls of America 2016

7

$160,000

30.0%