Retail and Restaurant Real Estate Trends to Watch in 2020

Retail and Restaurant Real Estate Trends to Watch in 2020

The retail and restaurant industries are constantly evolving. To help retail and restaurant decision makers navigate the changing environment, Buxton surveys our subject matter experts to identify the most important retail and restaurant real estate trends each year. The following excerpt from our 2020 Retail and Restaurant Real Estate Outlook summarizes three trends that will influence real estate decisions in the coming year.

Trend #1: Experiential Retailing and Unique Activities

Experiential retailing has been one of the top trends for several years and will continue to be an important factor in 2020. This is reflected in both in-store strategies and in the types of concepts that are expanding.

The growth in experience-oriented locations isn’t limited to new brands. Buxton Senior Vice President Tim White notes that existing companies are launching new concepts to further their market penetration.

Local based entertainment (LBE) venues are an important part of this trend. From indoor surfing to axe throwing, these concepts offer unique entertainment options in traditional retail centers. “LBE venues are still being developed on what seems like a daily basis,” observes White.

Trend #2: Continued Innovation in the Restaurant Industry

The restaurant industry’s evolution toward healthier and more convenient food options will continue in 2020, as will the growing popularity of food halls, reports PwC and the Urban Land Institute.

But the most critical trend in the restaurant industry today is arguably the growth in delivery as a revenue driver. As restaurants determine how to profitability and efficiently compete in the delivery market, we are seeing emerging real estate demand for a new type of location: ghost kitchens.

Ghost kitchens, also called virtual kitchens, are commercial kitchens without dine-in space. They are used to fulfill delivery and catering orders and can even house multiple restaurant brands under the same roof. Rent is cheaper because spaces can be smaller and located in less desirable areas, reports QSR magazine.

“Ghost kitchens are going to be something to keep an eye on in 2020,” predicts Stephen Polanski, senior vice president at Buxton. “With customer preferences and behaviors changing, an off-the-beaten-path, lower cost option will challenge A+ real estate options.”

Trend #3: Fitness, Health, and Wellness

Healthcare providers have been gradually moving into retail centers for a number of years now, but the trend has finally gained serious momentum. Healthcare services like urgent care, vision care, and dental care were among the first to move into retail centers, but Modern Healthcare reports that oncology and other chronic disease management services are following close behind.

The shift is beneficial to both healthcare providers and the retail industry. As retailers continue to trim the number of stores in their portfolios, healthcare providers have become highly desirable tenants for retail centers seeking to fill vacancies and find new traffic drivers. And as healthcare providers move toward a consumer-oriented business model that focuses on access and convenience, shopping centers present affordable opportunities to meet patients where they are. 

However, medical service providers aren’t the only health-related concepts seeking retail real estate space. Gyms and other types of fitness service providers continue to expand rapidly. These concepts offer a steady stream of repeat visitors and can be important cotenants for retailers and restaurants due to their traffic-driving power.

Access Industry Intelligence to Make the Right Decisions in 2020

Today’s retail and restaurant industries may be complex, but market intelligence provides the insights you need to identify the best path forward.

Our 2020 Retail and Restaurant Real Estate Outlook has the expert analysis you need to make smart real estate decisions. Download the report for our proprietary market rankings, a summary of market fundamentals, and more.