Thursday, April 19, 2018

Food Hall Site Selection

Nur Asri is an Associate at Larisa Ortiz Associates

Earlier this month, Cushman & Wakefield released a report titled, “Food Halls of North America”. Since their first report on the trend in November 2016, food halls have grown exponentially all over the country, and especially in New York (see #5 of our 2018 trends list).

The report lists twenty five different food halls in New York City (we’ve left out Essex Street Market because it’s an institution we’re more familiar with as a public market, more on this in a previous blog) but guess where they’re mostly located? That’s right, Manhattan. 

80% of the city’s food halls are located in Manhattan.

Source: LOA
Drawing a 5-minute walking radius around each of the food halls, I took a closer look at the demographics and worker populations surrounding these food halls to figure out why Manhattan is continuing to draw this attraction.

Source: LOA

When compared with food halls located in Brooklyn and the Bronx, those in Manhattan were situated in neighborhoods with higher population density, higher median household incomes, higher educational attainments, and higher proportions of Millennials aged 25-40. These are unsurprising facts for anyone who lives in the city but if you’re elsewhere looking to attract a food hall operator; these are just some of the criteria your downtown or neighborhood may need to offer.

The psychographic tapestry segments that dominated the food hall neighborhoods in both Manhattan and Brooklyn were Laptops and Lattes’, ‘Trendsetters’, andMetro Renters’ . These groups, as you can imagine, are all made up of high-earning, well-educated young professionals who are socially and environmentally conscious, technologically savvy, and enjoy discovering local art and culture and dining out.

Given that food halls are highly-curated cultural hubs for new and old restaurateurs to test food concepts and set trends, having an educated audience that seeks this type of experience and is hyper aware of the nutritional value of their food would be highly beneficial and complementary to the mission of food halls. These are the same customers that will likely come in to a food hall and Instagram their meal and night out, driving greater marketing and sales.   

Speaking of dining out – I also found that residents living near food halls in Manhattan spend more eating out annually than those in the outer boroughs. The exception lies in DUMBO, Brooklyn where the upcoming Time Out Market is slated to open later this year. Within a 5-minute walk of the soon-to-be-opened food hall, households are spending an average of $6,091 annually on eating out. This is even higher than those residents living near Canal Street Market, American Market by Todd English, and Gotham West Market!

The high density of worker populations is another trait food halls seem to prefer. All the food halls located in Manhattan have between 20,000 to over 100,000 daytime workers within a five minute walking radius. In comparison, the food hall with the greatest day time worker density in an outer borough is Gotham West Market at the Ashland (Brooklyn) with only 16,353 workers within a five minute walk.

Photo: Lou Stejskal  (Flickr)
Meanwhile, in Manhattan, the top three food halls with highest worker population densities are all located in and around Grand Central Station (Urbanspace at 570 Lexington, Urbanspace Vanderbilt, and Great Northern Hall), where there is a strong cluster of banks and financial services offices and over 100,000 daytime workers. Furthermore, most of these workers earn more than $3,333 per month, indicating strong spending potential particularly during lunchtime and after work.

Even within New York City, there are nuances with where food halls are growing. Food halls in the west side of Manhattan– from Chelsea up to Midtown West – appear to be riding on the wave of high population growth rates. Populations around Gotham West Market and Hudson Yards Food Hall, for example, are expected to grow between 14-15% in the next five years (some of the highest rates in the city!). And the same can be said of the growth in food halls in the outer boroughs. Aside from Industry City, all the food halls in the Bronx and Brooklyn are located in neighborhoods with rates of population growth higher than their respective County levels.

So it appears that even if your downtown doesn’t quite have the traits that we’ve seen with the food halls in Manhattan (i.e. high population densities, high worker densities, etc.) but is undergoing a renaissance and seeing an impressive development pipeline of residential homes and offices, then maybe attracting a food hall operator is not completely out of order.

Like attracting all other tenants, however, it is crucial to first consider the types of residents and workers that will be entering these new developments, what their spending patterns are like, and if these align with the traits that food halls are craving.

Are their disposable incomes high?
Are they trend-seeking consumers?
Are they younger, digitally-apt customers that will continue to support and market the food hall?

After all, as we’ve seen, the food hall is not for everyone. And it’s certainly not for every neighborhood.

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