Changing consumer needs in food and beverage will impact real estate
Tuesday, June 04, 2019
CBRE recently reported that massive shifts in the food and beverage industry will impact the real estate market in a big way. Millennial consumers are pushing for prepared food and ready-made, convenient meals that they can pick off the shelves.
U.S. restaurants and grocery operators are reinventing themselves to meet these new demands. The real estate these businesses occupy will be revisited as well.
According to the commercial real estate giant, inner-ring suburbs will emerge as hot spots for food and beverage and enjoy higher spending by suburban households due to their strategic locations. Stores will have to make room for prepackaged meals, delivery pickup, automated ordering, and self-service, all of which will influence store location and store design.
As these suburban neighborhoods become hot destinations, more mixed-use complexes will be developed in these areas.
25% of the retail sales in the U.S. can be attributed to restaurants, bars, and grocery stores, and these businesses are claiming an expanding share of retail real estate. Grocery-restaurant combinations will act as ideal anchors serving these first-ring suburbs.
According to the International Council of Shopping Centers, U.S. mall square footage dedicated to restaurants has increased by 18% to 43 million square feet over the last decade. This figure does not include the real estate that food court operators occupy.
The increase in kitchen-only outlets and delivery services will increase the real estate footprint for food and beverage as the new sector tries to capture shifting consumer demand.
About 28% of U.S. households fall under the category of a single-person household, a growing number that has facilitated the demand for convenient dining. A rise in dual-income families has also contributed to this, since these households have less time to cook or clean up after meals.
In the next five years, we can expect spending on restaurants and groceries to outpace soft goods due to economic factors, demographic shifts, and automation.
Another aspect that will impact the overall picture is generation-based spending. Right now, baby boomers and Generation Xers spend more, but the new generation of consumers will soon surpass that. The industry will witness a surge in millennial spending, as the generation enters its peak earning years.
The inclusion of bars and restaurants in grocery stores with made-to-order, higher-margin fare, have been a boon for these newer-generation households. This sector, along with convenient food and beverage formats like fast-casual and fast food, have added momentum to the real estate shift.
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