CW Retail - Food Halls Report

FOOD HALLS OF AMERICA

Shopping Center Vacancy is Actually Down! (For Now)

11%

10 12 14 16

10%

9%

8%

0 2 4 6 8

7%

Million Square Feet

6%

5%

2009 Q3

2010 Q3

2011 Q3 Net Absorption

2012 Q3 New Construction

2013 Q3

2014 Q3 Overall Vacancy

2015 Q3

Source: Costar Group, Cushman & Wakefield Research

of 3.3%, the year prior the growth rate was 3.7%. We anticipate growth in 2016 will be close to 4.0%. While Americans are spending more money on food of all types, just in March 2016, Americans spent more money dining out than they did purchasing groceries. In recent years the gap between grocery and restaurant spending had been consistently narrowing; this was the first time that “away from home” expenditures ever surpassed “at home” food spending. The trend has repeat- ed itself every month since. It is easy to understand the strong growth that the restaurant sector has experienced. Americans spent roughly $1 trillion on food expenditures in 2005 and just over $1.5 trillion in 2015. The food pie has gotten bigger. Cushman & Wakefield has been tracking retailer and restaurant chain growth plans for the past decade. In 2007, restaurants accounted for roughly 25% of all the

planned unit growth across all retail sectors tracked. By 2010 that number had increased to 35%. For the last three years, restaurant concepts have consistently accounted for 50% of all the planned unit growth. Restau- rants have, by far, been the most active sector of the marketplace regardless of the geography (urban or suburban) or type of retail property type (whether freestanding or shopping center). Yet the restaurant industry has not been immune from the same trend of elevated bankruptcies that has impacted hard goods retailers, even in 2016. The recent failures of concepts like Buffets, Inc., Logan’s Road- house, Garden Fresh and others stands in stark contrast to this trend of growth. But market saturation, not waning consumer demand, is the culprit here. Nearly every major restaurant chain that filed for bank- ruptcy in 2016 has been a casual dining player; that sector is where we are seeing the greatest weakness as older concepts find themselves caught between changing

CUSHMAN & WAKEFIELD

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