- Manhattan retail availability hit a 10-year low of 12.8% in Q2, driven by a surge in restaurant demand across all formats.
- NYC restaurant tenants are outbidding competitors and repurposing non-kitchen spaces, even paying up to $100K to add venting systems.
- Despite strong leasing activity, restaurant rents remain below prepandemic levels but are projected to rise amid increasing competition and limited supply.
Appetite For Retail Grows
Demand for restaurant space in New York City is reaching historic highs, reports WSJ. From fast-casual chains like Cava and Naya to experiential cocktail bars and massive steakhouses, eateries are in high demand across NYC. This surge is helping drive a strong recovery in the city’s retail real estate market.
Manhattan’s retail availability fell to 12.8% in Q2 2025, the lowest since 2014 across 11 major retail corridors, per Cushman & Wakefield.
If You Can Vent It, You Can Rent It
With limited kitchen-ready inventory, restaurants are adapting spaces once used for other retail functions. The cost to retrofit with proper ventilation can run up to $100K, but many restaurateurs are undeterred.
“You can’t stream a steak,” said one industry insider, summing up the resilience of food-and-beverage tenants against e-commerce.
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Social Media + Dining = Crowds
Millennials and Gen Z are spending more on restaurant experiences, often delaying home ownership and starting families. Instead, they favor on-demand dining and social-media-worthy food moments.. Viral content is translating to foot traffic and long lines at venues like Anita Gelato and BarChef.
Food delivery spending also surged, surpassing $120M in Q1 2025, according to city data.
Rents Still On The Menu
Though demand has surged, restaurant rents remain below their prepandemic peak after falling nearly 20% during the pandemic. But that discount may not last. In popular neighborhoods like the Lower East Side and East Village, brokers are seeing listings get five to 10 offers within days.
“You get in now, or you miss your chance,” said one local operator who recently opened a natural wine bar in a former bike courier office.
Why It Matters
Food and beverage tenants have led NYC retail leasing for a decade, making up at least 35% of all leased SF. With online shopping squeezing other sectors, restaurants remain “ecommerce-proof,” giving landlords a reliable tenant base.
What’s Next
Analysts expect upward pressure on rents and continued conversion of retail spaces into restaurants, especially in high-traffic and trendy areas. Nationwide, total restaurant sales are forecast to reach $1.5T in 2025, up $400B year over year, according to the National Restaurant Association.
New York’s dining scene is not just rebounding—it’s reshaping the city’s retail landscape.
