April 17, 2019
U.S. consumer spending and demographic patterns suggests significant changes are in store for food-and-beverage operators and the real estate they occupy. Among the insights from Los Angeles-based CBRE’s new report on the F&B sector include a greater push for convenient, prepared foods, a growing millennial influence, and the emergence of inner-ring suburbs as the industry’s hottest market.
“The food-and-beverage category claims nearly 25% of retail sales in the U.S., and few other sectors have expanded their presence in shopping centers as quickly as restaurants and grocery stores,” said CBRE’s Melina Cordero, Global Head of Retail Research. “But this sector is just as susceptible as others to sweeping demographic changes, which we’ll see influence real estate through formats such as grocery-restaurant combinations, more kitchen-only outlets and delivery services.”
The F&B sector is undergoing rapid evolution due to demographic shifts, economic factors and automation. Interestingly, the implications of those changes to the CRE sector are revealing.
CBRE’s report notes F&B activity in retail real estate has mirrored its growing share of total retail sales over the past 10 years. Shopping malls particularly have had significant growth in F&B space. Restaurants (excluding food courts) currently occupy an estimated 43 million square feet of mall gross leasable area, up 18% or 6.6 million square feet from 2007.
CBRE’s predictions about the near-term outlook for the U.S. restaurant and grocery industries and potential implications for retail real estate include:
– Neighborhoods on the edge of the urban core will become even hotter F&B destinations
– Growth of single-person households will boost demand for convenient dining
– Spending in restaurants and grocery stores will outpace other soft-goods categories for the next five years
– Millennials’ spending on F&B will exceed all other generations within 10 years
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