Communities’ Appetite for Food Halls Grows But Risks Abound, Says IEDC Panel

by John Nelson

ATLANTA — Five years ago, there were about 30 food halls across the entire country. By 2020, Cushman & Wakefield predicts there will be 300. “I agree we have a lot of food halls coming,” said Jamestown president Michael Phillips. “In some regards it signals the end of the food hall.”

The comments from Phillips came Monday morning during a panel discussion at the annual conference of the International Economic Development Council (IEDC). The four-day conference, which ends Wednesday, has drawn 1,600 economic developers, city planners, marketing professionals, consultants and community leaders to the Hyatt Regency in Atlanta. It’s the largest number of conference attendees ever and the first time in a decade that Atlanta has served as the host city for the annual gathering.

The panel Phillips participated in was titled “Intersection of Food and Economic Development.” His fellow panelists included Adam Schwegman, senior vice president of Brookfield Properties Retail, who is stationed in Atlanta; Thomas McNair, executive director of Cleveland-based Ohio City Inc.; and Haile Johnston, founder of The Common Market in Philadelphia. Catherine Timko, CEO of Wilmington, Del.-based economic development consulting firm The Riddle Co., served as panel moderator.

Food traffic, the right demographics, and a community that appreciates food are the main ingredients needed to build a successful project like Flagship Commons in Omaha, Nebraska, said Schwegman, who has built seven food halls in the past four years in his role as vice president of food and beverage leasing at General Growth Properties, acquired by Brookfield Property Partners in August.

Even so, Schwegman warned the crowd of approximately 250, “It takes a lot of time — a lot more than you would think. It takes a lot of capital — a lot more than you think. A lot of infrastructure — a lot more than you would think.”

In contrast, Jamestown does not build stand-alone food halls. “We create food halls as part of innovation hubs in our ecosystems because we don’t actually think that food halls can stand on their own long-term,” Phillips said. “There’s no chance you can have an economic model that lasts if everyone is operating on a six-month lease. It doesn’t work for the tenant or the landlord.”

Instead, Jamestown focuses on only local food and local restaurants, with the exception of a single national anchor. “We believe you create these environments, which are very intensive, cost-wise, time-wise, management-wise, relationship-wise, and you need to have strong economics in addition to a lot of office and a lot of residential,” Phillips said.

Michael Phillips of Jamestown, developer behind Manhattan’s Chelsea Market, says food halls may become oversaturated. (Photo courtesy of Jamestown)

There is as yet no industry definition of what constitutes a food hall, and the models vary widely, beginning with the idea of a food hall as the next evolution of the food court. At the other end of the spectrum, for instance, are food halls like the Galley Group’s Federal Gallery in Pittsburgh, which acts as an incubator for up-and-coming chefs. The chefs operate their restaurants rent-free for one year with the Federal Galley paying for everything else, including staffing, equipment maintenance, and utility costs.

Still, the broader trend toward offering consumers healthy local meat, seafood, fish and produce shows no signs of abating. Johnston, founder of The Common Market in Philadelphia, noted that his decade-old nonprofit, which creates a bridge between small local farmers and underserved, at-risk populations, has been growing exponentially since it opened and this year went national.

As to for-profit food halls, however, Phillips said, “Beware. It’s important to understand that in order to make them for-profit, you need another subsidy to make that happen.”

— Sibley Fleming

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