COVID-19 threw up a significant speed bump to food hall momentum as they shifted to survival mode during government shutdowns. Yet they weathered disruption surprisingly well. According to Cushman & Wakefield, 223 food halls were open and operating in the U.S. at the start of 2020 and 165 were in development. Fewer than 18 closed during the pandemic, and only six closed permanently.

That perseverance owes primarily to food halls’ ability to transition into virtual kitchens, noted Phil Colicchio, executive managing director of specialty food-and-beverage, entertainment and hospitality for Cushman & Wakefield’s Colicchio Consulting Group. “The additional benefit is that many food halls across the U.S. are designed with bars that have indoor/outdoor capability. During the pandemic, the ability to provide food-and-beverage in an outdoor setting made a huge difference,” he said.

Food hall operators that had put projects on hold are resuming expansion plans. “The food hall movement is strong. It is becoming more and more popular with mixed-use developers, and it certainly is becoming a business model to study and to riff on,” said Colicchio. Cushman & Wakefield is working with clients on roughly 30 food hall projects. For example, downtown Knoxville will welcome its first food hall, Marble City Market, in August. The 15,000-square foot food hall is located at the base of Regas Square and will feature about a dozen vendors, a full-service bar and two Topgolf Swing Suite simulators.

“There were some food hall casualties in 2020 like everything in retail, but we’re seeing a lot more being planned going forward,” agreed George Banks, founder of Revel, a real estate consulting firm that specializes in food halls. Despite the growth in food halls in recent years, a surprising number of municipalities still have zero or perhaps only one. So there is runway for growth, he said. That being said, not all food halls are successful. There are some great ones, and there are a number of average food halls that are not doing as well, he added.

Openings on tap

If anything, landlords are more in favor of food halls now than prior to the pandemic, noted Colicchio. Landlords always have been mindful of the high failure rate among restaurants. The diverse mix of smaller tenants mitigates risk. If one vendor fails, it doesn’t mean the whole hall closes. A food hall also is more cost-efficient for vendors. According to Cushman & Wakefield, operating in a food hall costs about one-tenth of a standalone location for a small restaurateur. Those savings provide a better path to success for restaurant operators. Food halls are a big hit with consumers, too, and thus drive traffic to properties. “A properly designed and curated food hall is a wonderland of variety at very approachable price points,” said Colicchio.

These days, food halls are finding homes in a variety of settings. “At the onset, most people thought of the food hall as an urban unicorn, but there is no longer a prototypical space that a food hall will inhabit,” said Colicchio. They emerged in city centers of major metros like New York City, Los Angeles and Atlanta and since have found success in mixed-use centers in edge cities and secondary markets from Omaha to Charlotte.

And retail landlords increasingly seek food halls as a way to reinvigorate their food-and-beverage offering. “A good food hall brings together some terrific artisanal food vendors, usually with a lively bar scene,” he said. “That type of variety show is popular everywhere.”

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Brookfield Properties’ Manhattan West mixed-use property in New York City’s Hudson Yards will debut a Citizens food hall in September. The two-floor, 40,000-square-foot venue will include as many as nine kiosks and a range of fast-casual options, as well as a boutique wine shop that offers interactive classes, an EllaMia cafe and a central bar that will serve pastries during the day and craft cocktails into the evening. “Food halls can be incredibly additive to a project,” said Brookfield Properties senior vice president of retail leasing Jason Maurer.

One reason Brookfield selected C3 is that the operator’s merchandising makes a point to reflect the surrounding neighborhood, which includes a daytime office population and a night crowd that feeds off Madison Square Garden, the Javits Center, the theater district and other attractions. “We believe that both everyday New Yorkers and visitors to the city will come to see Manhattan West as a culinary destination,” added Maurer.

Citizens New York is the first food hall for digital kitchen operator C3, which stands for Creating Culinary Communities. A second Citizens food hall is scheduled to open in Simon’s Phipps Plaza in Atlanta in 2022.

Standing out in the crowd

Food hall operators are working to differentiate themselves in what is becoming a more crowded sector. “There is no universal approach to food halls; it varies based on how you’re viewing them programmatically,” noted Maurer. For example, Citizens New York will feature two full-service restaurants and a bar that increases the footprint, while Brookfield’s Assembly Food Hall in Nashville offers a rooftop concert hall. “No matter the size, it’s about how to best utilize and activate the space,” he said.

Special events, activities and entertainment have become essential to a vibrant food hall. That programming can range from a weekly farmer’s market or movie night to podcast space available for public use. “What we’re seeing more of are companies that were doing large-format types of entertainment that have now scaled down product that can fit well as entertainment within a food hall,” said Colicchio. One example is golf swing simulators, such as the Topgolf Swing Suites, that feature Plexiglass walls that can fit in space as small as 100 square feet.

Another important component to food halls is keeping the tenant mix fresh. Though it’s counterintuitive to typical leasing strategy, landlords and operators need to be willing to sign short-term leases that allow them to turn tenancy over. “If the tenant lineup is identical in five years, your patron is going to lose interest,” said Banks. Food halls also are taking advantage of mobile kiosks and pop-ups that bring in specialty retail or food-and-beverage concepts as a means continually to introduce new concepts. Revel, for example, consulted on a project that added a pop-up for popular Mexican soda company Jarritos in Los Angeles’ Grand Central Market.

As the food hall sector evolves, some are becoming more like ghost kitchens that people also happen to be able to visit, effectively combining the in-person experience with the ability to provide food for delivery and pickup, added Banks. That shift will require more adoption of apps and point-of-sale systems that allow delivery customers to order from multiple vendors at one food hall. “The same trends that are impacting restaurants around the country for to-go and delivery and off-site dining are going to be a challenge for food halls, although they are well-suited to adapt to those changes,” Banks said.