The 'Huge Impact' of Urban Food Halls

NEW YORK CITY—Office landlords in search of a retail amenity with widespread appeal may have a meal ticket in the form of food halls, which have proliferated across Manhattan since the runaway success of Eataly at 200 Fifth Ave. Likening the trend to the impact that a major tenant or new subway construction can have on a submarket, CBRE vice chairman Peter Turchin said Tuesday, “We're seeing this type of impact from urban food halls. We're seeing huge impacts on what goes on in real estate and where it goes on in the area.”

Just don't mistake the likes of Eataly or City Kitchen at 700 Eighth Ave. for a CBD version of the food court that's known but not loved in shopping malls across the US. “If you visit all of the food halls around the city, you'll see that all of them offer something creative and unique,” said Amira Yunis, EVP with CBRE Retail, during a panel discussion moderated by Turchin. Yunis arranged UrbanSpace's forthcoming location at 230 Park Ave., which will encompass 12,000 square feet in Midtown East.

An individual location may be opened by an owner-operator of food hall concepts, such as UrbanSpace, or it may have the imprimatur of a celebrity chef, such as the 100,000-square-foot Bourdain Market coming to Pier 57 with the backing of Anthony Bourdain. What the various urban food halls and markets have in common is “authenticity,” David LaPierre, also a CBRE Retail EVP, said Tuesday. He added that ultimately, the goal of every entrepreneur behind such an establishment is “to make money and create a unique concept that people will come to. If you can create that, you're going to have buzz, you're going to have bodies, you're going to have people spending money.”

For many years, Turchin observed, Chelsea Market at 75 Ninth Ave. was the only food hall of its kind in town. The proliferation of locations since Eataly opened in 2010 has been dramatic. In addition to the five already named, Manhattan has or soon will have Le District and Hudson Eats, both at Brookfield Place; the Plaza Food Hall, in the Plaza Hotel; a second Eataly at 4 World Trade Center; and a Danny Meyer location at 10 Hudson Yards. There are also three in Brooklyn, including the forthcoming DeKalb Market Hall at City Point.

In the case of the Eataly location that helped put the Flatiron District on the map, LaPierre—who arranged the lease—said the concept was distinguished by a combination of culture and education. Learning how to eventually prepare some of these dishes themselves is among the draws for consumers.

Differentiation is not the only element of success in a food hall, and neither is an entrepreneurial commitment. LaPierre and Yunis pointed out that attention to the fundamentals of retail—including location, location, location—is also a driver. And Yunis cited the decades of experience that UrbanSpace has had operating locations both in New York and in its native UK; the first New York-based UrbanSpace market opened in 1994.

Vice chairman Paul Amrich said a great many of the extant food halls aren't actually located in office buildings, although office landlords have sought these as part of a menu of tenant amenities that might also include a gym or a coffee bar. For an establishment of this kind to work well in an office property, Amrich said, the building itself needs to offer sufficient size and scale both to accommodate the space and provide a ready-made customer base for the food hall. Another factor he identified was access to public transportation. UrbanSpace Vanderbilt will be located near Grand Central Terminal, for example, while 200 Fifth is served by a number of subway lines.