The commercial real estate landscape has changed significantly in recent years. RJ Hottovy has seen it firsthand.
“The demand for commercial real estate is real today,” said Hottovy, Head of Analytics and Research at Placer.ai. “There is a tremendous demand for new restaurant concepts, as well as existing restaurant concepts that are still innovating.”
A recent webinar hosted by Placer.ai examined that method. Post-pandemic changes in consumer behavior have reshaped restaurateurs’ real estate strategies. For example, markets like Scottsdale, Ariz., are deep red due to significant population migration to the U.S. Sunbelt in recent years.
“we have [seen a] A huge influx of people into Texas and Florida and of course the Phoenix area. Scottsdale has never been busier as a market,” said webinar panelist Emily Durham, senior vice president of securities, food and beverage advisory at JLL.
Below are some of the industry trends discussed during the webinar.
A small town with great potential
suburbs and countryside, restaurants that generally offer relatively low rents are becoming increasingly attractive to restaurant chains. For example, Hottove noted that Chipotle has recently found success in markets with fewer than 100,000 residents.
“These smaller markets have a much higher number of visitors per location,” Hottobee said. “There’s less competition in those markets. You’ll have first access to workers in those markets. (And) we’re starting to see migration trends, more people moving to the suburbs and rural areas.”
Webinar panelists said the recent gradual recovery of office space across much of the United States is helping to increase the appeal of suburban commercial real estate.
Drive-through lanes are increasing rapidly
It seems likely that future QSRs will have as many as four drive-thru lanes, as evidenced by new locations from chains like Shake Shack. After all, most modern consumers want convenience.
Case in point: Shake Shack’s drive-thru store in Orlando, Florida saw a spike in foot traffic in June 2023, according to data from Placer.ai.
“We’re seeing more and more demand for double and triple drive-thru areas,” Durham said. “I don’t see interest in this issue waning anytime soon.”
Rethinking the mall
While the old-fashioned indoor malls of the 1980s are becoming largely irrelevant, establishments like outlet malls have certainly captured the attention of modern consumers.
Webinar panelists said the role of American shopping malls has changed.
“New projects will generally be more like ‘lifestyle centers’ than indoor malls,” Durham said. “Staying time has become longer” [at lifestyle centers] Because of the tenant mix. You can eat, drink, and shop.
“The length of stay at the new local lifestyle center is 80 minutes,” the Texan added. “That’s longer than any retail store in the Houston area that’s been open for 40 years.”
C-store, restaurant blur
Wawa, convenience stores, etc. sheets has invested heavily in its food platform in recent years, adding pickup windows and mobile ordering. These investments are paying dividends in the form of increased visitor numbers, Hottovy said.
“In the evening and daytime segments, C stores suddenly seem to have a much larger share,” Hottobee said.
“I have to believe some of it is generational, such as the rise in popularity of c-stores,” Durham said. “My daughter goes to college in a Philadelphia suburb, and all she does is go to Wawa (and) that’s what her friends do. These (stores) are an initiative. We are strengthening.”