Restaurants are dominating tenant leasing activity at retail shopping centers as retail owners look for tenants that are ecommerce resistant. Quick service platforms have been particularly popular for shopping centers, and many small chains have increased their footprints as a result. David Shulman, senior economist for the UCLA Ziman Center for Real Estate and UCLA Anderson Forecast, however, thinks that some retail owners may be overdoing restaurant leases because they might not be as Internet resistant as some owners believe.

While sit-down and quick service concepts have increased, Internet and delivery orders have also increased. Shulman says that there may be delivery-only business models that pop-up to fulfill Internet orders. “I think retail owners are overdoing restaurants. Restaurants aren't immune because you can order online and have the food delivered,” he tells GlobeSt.com.

Delivery-only restaurants haven't appeared yet, but there is potential for the model to work. The concept would mean that restaurants could use a cooking-only facility, either in a low-cost retail area or an industrial-like commercial facility. “Most owners believe that restaurants don't have as much Internet competition, but restaurants could have a different set up for online delivery,” explains Shulman. “It hasn't happened yet, but someone could come up with a business model that has a restaurant facility with only cooking and delivery for online orders. In that scenario, they could be in a lower rent area, not in a retail strip mall or a high traffic area.”

Some owners are already seeing restaurants with a significant following are able to sign leases at low-cost and low-traffic locations, because customers will travel to them. “I had a conversation with an owner that said that if a restaurant has a following, the physical location of the restaurant doesn't matter and restaurants can move to a lower rent area,” says Shulman.

While restaurants are currently popular and performing well in retail shopping centers and strip malls, Shulman recommends using caution and not overinvesting in restaurant leases to protect against ecommerce.

Instant Insights /

Are Restaurants Really Safe From Ecommerce?

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