NYC Restaurant Rush Powers Retail Recovery

8 minutes read

Restaurant operators are driving New York City’s retail comeback, giving rise to the new landlord mantra “If you can vent it, you can rent it.”

Quick-service chains, viral dessert shops and upscale cocktail lounges are snapping up space at a pace that’s pushing availability to decade-long lows, the Wall Street Journal reported. Retail availability in Manhattan’s 11 busiest corridors dropped to 12.8 percent in the second quarter, the tightest market since 2014, according to Cushman & Wakefield.

That demand is spilling into previously non-restaurant spaces. Conversion costs to add kitchen infrastructure can hit six figures, but more tenants are ponying up to secure prime spots.

Restaurants account for at least 35 percent of all leased retail square footage in the city over the last decade. The rise tracks with post-pandemic shifts in consumer habits: more dining out, app-driven ordering and a surge in food-centric social media content; spending on top delivery platforms hit a record $120 million in the first quarter, per city data.

Operators are tailoring concepts to meet the moment. Cava, Joe & the Juice and Naya offer frictionless app ordering; relative newcomers like Anita Gelato and BabySips wine bar lean hard into Instagram aesthetics. Frankie Solarik’s BarChef in Midtown — a $43-cocktail concept with elaborate plating — books out its weekends weeks in advance.

Despite the land grab, rents remain below pre-pandemic highs, thanks to the glut of second-generation restaurant spaces that hit the market after 2020’s mass closures. But they’re set to rise fast, especially in trendy neighborhoods like the East Village and the Lower East Side, where some listings draw double-digit offers in days.

While e-commerce has impacted other retail sectors, restaurant real estate is proving resilient. “They’re ecommerce-proof,” said Steve Soutendijk of Cushman, noting that New York’s roughly 29,000 restaurants remain impervious to the factors thwarting other aspects of the retail world.

— Holden Walter-Warner