COACHES CORNER
Commercial Trends
dining venue called a food hall that has 22 different restaurant venues inside. Each individual concept is about 300 square feet each. Food halls tend to have some common seating for diners and may have entertainment or other retail attractions as well, but they mainly serve as a central lo- cation for a lot of small kitchens providing delivery and take-out services. Historically, they’ve been more like the food courts in malls, but more modern versions have re- ally nice dining and often contain kitchens from “sit-down restaurants.” 3 COMMERCIAL TENANCIES MAY BECOME MORE FLEXIBLE One of the traditional arguments in favor of owning a commercial property instead of a residential one is that your tenants tend to stay in place much longer. A typical commercial lease might be five years or more. However, as restaurants and retail stores become more flexible and need less space, their residencies in commercial spaces may become more flexible as well. Pop-up stores, for exam- ple, tend to be more retail-oriented than food-service-oriented. However, restau- rants themselves are starting to function more like pop-ups in some areas, opening and closing seasonally around a kitchen that does deliveries rather than trying to support a full-blown dining operation. NEWDIRECTIONS FOR COMMERCIAL DEVELOPMENT While some investors might feel con- cerned about these changes, I find them very exciting! Shifts in consumer prefer- ences can signal the end of certain things in an investment sector, but they also herald new beginnings and exciting new investment opportunities. Sometimes, they bring positive improvements to our daily lives as well. For example, much as restaurants are getting smaller in a lot of cases and may be a little more transient (again, in some, not all cases) than they used to be, other industries
are getting in on the action as well. Soul Cycle, a gym devoted to giving its members a unique indoor cycling and fitness expe- rience, recently began experimenting with opening seasonal locations during certain busy seasons in order to meet the needs of their customers while they are traveling or on vacation. In another instance, a leasing company has dedicated itself to creating commercial venues that host pop-ups on short-term leases so that businesses can try out their concepts in a proven market loca- tion or hold events in an interesting venue. You can test your business idea out in a real retail setting using a short-term lease! AS ATTITUDES AND BEHAVIORS CHANGE, REAL ESTATE NEEDS CHANGE TOO These shifts in behavioral preferences are particularly important to real estate investors because they require us to reframe how we view our investments and potential investments. For example, in the past, a permanent location for a store or restaurant would likely have had certain allowances in the lease that let the tenant change the prop- erty in permanent ways. Property owners might have even made permanent upgrades to their properties in order to attract certain types of tenants. While this is still certainly relevant in today’s market, another option might be to keep the interior more open and generic so that it is easy to move tenants in and out as they transition from location to location seasonally or when their market testing is done. The retail world is changing. You definitely have to be innovative and evolve with it to succeed in commercial real estate! •
How Food Delivery Could Change Everything About Commercial Real Estate
they buy real estate and how commercial developers and investors invest in and design commercial real estate space. This shift has already created three dis- tinct changes in restaurant real estate: 1 VIEWS ON SPACE ARE CHANGING Can you imagine a classic chain restaurant with only a few hundred square feet? Big chains are starting to investigate opening extremely small restaurants that consist mainly of a small waiting area and a kitchen. The entire restaurant will be dedicated to food prep and delivery. Even restaurants that retain their seating areas are not necessarily opting to have as many thousands of square feet as they used to require. 2 THE AGE OF THE “FOOD HALL” IS APPROACHING Just yesterday, I went to a new type of
SOCIAL SCIENCE AFFECTS RESTAURANT AND RETAIL SPACE.
by Pamela J. Goodwin
A
s a commercial real estate broker and investor, I am constantly watch- ing how social media and technology affect my industry. Restaurants and retail spaces are two huge parts of my sector, and they are directly affected by anything that affects human social behavior, including social media, communication habits, and general behavioral preferences. Right now, I’m seeing the beginnings of a huge shift in behaviors centered around
delivery services. So many more people these days prefer to have things delivered, especially when it comes to meals. Every business is trying to cash in on this, from existing restaurants like Panera, which is launching its own internal delivery service, to services like Dash and Uber Eats, which pick up food from a variety of locations and deliver it. Even Facebook is getting in on the action. Just yesterday I received a promotion from Facebook that allows you
to select different restaurants in various categories, then order through Facebook and it will be waiting on you when you (or the person picking up the food) get there! Of course, this is a huge change from the traditional restaurant experience, wherein you would go sit down, order your meal, wait for them to prepare it, eat the meal on-site, then pay and leave. It will very likely completely change not just how restaurants do business, but how
Pamela J. Goodwin is the founder and CEO of Goodwin Commercial a commer- cial real estate firm specializing in retail/ restaurant development, brokerage and consulting firm in Dallas, Texas, and a
Think Realty coach. Learn more about her commer- cial real estate courses at www.thinkrealty.com/ coaches or reach her at pam@pamgoodwin.com
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