Lenders have hit the pause button on many CRE sectors, from hotels and retail to ground-up construction, lenders are taking the cautious road. But, there are a few asset classes that are still worthy of a deal. Multifamily and industrial are of course on the list, but ghost kitchens—industrial kitchens that service take-out and delivery food orders without the costly operational expenses of a traditional restaurant—are the welcome new favorite.
"Naturally, most lenders are risk averse and so are standing on the sidelines with regard to general retail lending and construction—particularly as labor and materials shortages prevail," Stephen Stein, managing partner at Tauro Capital Advisors, tells GlobeSt.com. "Instead, we have seen lenders favor strong asset classes like multifamily and industrial, as well as niche categories like ghost kitchens and triple-net-lease, which are experiencing tremendous demand at this time."
The firm noted these preferred asset classes as it has worked with lenders on financing deals throughout the pandemic. "At Tauro, we are consistently monitoring lender sentiment," says Stein. "In fact, we place a significant emphasis on nurturing our lender relationships and continuously expanding our lender network, which has contributed to our growth."
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In the last year, Tauro has become a leader in the ghost kitchen space due to this strong demand. "Many debt and equity providers are financing ghost kitchens now," says Stein. "These off-site locations allow restaurants to focus on cooking the food that their patrons want and providing it for them in a safe and convenient manner at a time when many eating establishments were prohibited from serving customers on-site."
Ghost kitchens aren't a new business model, but they became a necessity during the pandemic not only for restaurants to fulfill online orders—which increased sustainably, but also to generate revenue during business closers. "Ghost kitchens kept many restaurants alive during the pandemic, when pick-up and delivery were their only options for bringing in business, and they continue to be popular as we deal with COVID-19 variants," says Stein. "As the demand for food-delivery services skyrockets, we believe ghost kitchens will continue to present an additional revenue source for restaurants even after we fully emerge from this crisis, and lenders will be looking to service this demand."
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Kelsi Maree Borland
