One fact is very clear as we assess the retail landscape and take note of the variety of retail activities taking place: food and beverage (F&B) and dining out continue to reshape consumer trends. These trends are heavily influencing retail activities throughout the region, especially in the Downtown Los Angeles submarket.
The market continues to show great activity in F&B as landlords look to absorb vacancies with more food uses by creating unique dining experiences and take-out options for today’s consumer. This new demand has been the catalyst for the increase in commissary kitchens and restaurateurs leasing spaces for delivery models that cater to the growing, app-based delivery services. CBRE’s latest report, the Food in Demand Series, highlights the momentum of F&B. This extends to fast-casual dining, prepared dining options offered in grocery stores, and as stand-alone offerings in mixed-use settings, such as residential, creative office and hospitality projects. Per the report, consumer spending in restaurants amongst Millennials, Generation X and Baby Boomers has outpaced spending on grocery items. This is a significant shift for consumers. For this reason, we will likely see landlords maintain a focus on F&B as a means to bring value to their assets and create a social adhesive that attracts and ensures consumers will remain at a particular asset.
Derrick Moore, CBRE
Likewise, pop-up stores featuring fashion, apparel, electronic products — often combined with boutique coffee and specialty food concepts — are also very active in the market. Some of these stores feature innovative products from a number of retailers, with availability both online and in brick-and-mortar stores. The economic drivers continue to include the increasing population in LA’s metro urban core. In Downtown, we’ve seen the residential population climb from about 18,000 residents to more than 70,000 over the past 20 years. This, along with a consistent daytime population of about 500,000, continues to attract a variety of retailers.
Similarly, the food hall trend is showing no signs of slowing down. Landlords continue to use this food amenity as a means for attracting consumers to their projects. A successful food program will increase customer traffic and hopefully result in lower vacancies in other parts of a project. With F&B spending accounting for $1.5 trillion of retail sales, as reported by CBRE research, food and dining choices are poised to remain in a dominant position when it comes to determining how retail spaces are defined and used by landlords and consumers alike.
Overall, we should expect to see more food options in food halls, as prepared offerings in grocery stores and specialty markets, and featured on the many app-based food delivery services that are redefining our food expenditures one delivery at a time.
— By Derrick Moore, senior vice president, CBRE. This article first appeared in the July 2019 issue of Western Real Estate Business magazine.