Restaurant Leasing Up as Americans Keep Dining Out

Restaurant leasing is booming as Americans dine out more, driving retail real estate to new heights.

Restaurant Leasing Up as Americans Keep Dining Out

Restaurant leasing is booming as Americans dine out more, driving retail real estate to new heights.

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Good morning. Restaurant leasing is booming as Americans dine out more, driving retail real estate to new heights.

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Market Snapshot

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*Data as of 6/10/2024 market close.


Restaurant Leasing Up Thanks to More People Dining Out

Once viewed as dead-end investments during the pandemic, restaurants have become a leading force in retail real estate as Americans dine out more than ever.

A surge in leasing: In 2023, food services accounted for over 19% of all retail leases, the highest since CoStar Group began tracking in 2007. This growth reflects a broader trend: Americans are spending more on dining out, driven by low unemployment, rising wages, and a millennial shift towards later marriages and fewer children.

Record-breaking spending: The U.S. Agriculture Department reported that households spent nearly 53% of their food budgets on dining out last year, a record high. Total restaurant sales are projected to exceed $1.1 trillion in 2024, continuing a trend of rising expenditures on food away from home.

Source: Axios

Rising occupancy: Retail real estate firm Pine Tree has been signing new restaurant tenants at rents up to 10% higher than pre-pandemic levels. Chains like Chipotle have capitalized on this trend, opening a record 271 new locations last year and planning to add about 300 more this year. Chipotle’s new locations, featuring drive-through lanes, cater to the growing demand for digital orders, which now account for about 37% of total sales.

Landlords interested: Landlords, once cautious of restaurant tenants due to high build-out costs and failure rates, are now more eager to sign leases. Data shows food establishments boost foot traffic to nearby businesses. Pine Tree reported that sales volumes among its fast-casual restaurant tenants have increased 6% annually since 2019, about double the historic rate.


Sustained growth: Renewed consumer interest in dining out is fueling a resurgence in restaurant leasing and activity, with more Americans dining out than ever before. While challenges like rising costs may impact profit margins, the overall trend shows strong resilience and growth potential. Landlords are also embracing restaurant leases as a key driver of foot traffic and revenue.


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✍️ Editor’s Picks

  • Delinquencies soar: According to the Mortgage Bankers Association, commercial mortgage delinquencies rose in Q1, driven by nonaccrual office loans at banks.

  • Defaults galore: RFR Holding faces foreclosure for failing to pay off a $224M loan, defaulting on multiple fronts.

  • Richer than ever: According to Federal Reserve data, aggregate US household wealth hit a new record of $160T in Q1. Household net worth rose by an average of 3.2%.

  • Halted: A judge has postponed Fortress Investment Group's $548 million foreclosure against Charles Cohen, deeming it "commercially unreasonable" under the Uniform Commercial Code.

  • Betting on the Fed: Economists are divided on whether the Fed will cut rates this year two or three times. According to Bloomberg, nearly 41% expect just two rate cuts. 


  • Viva las vacancy: After a record-setting 2021, Las Vegas apartment market sales volumes have dropped sharply to Great Recession levels, with only $50M traded in 2024.

  • Suburban surge: Apartment occupancy in the northwest San Antonio submarket is up 15.4% YoY, with rents rising by 8.2% and strong deman seen in Boerne.

  • Secure senior living: Safehold, Inc. (SAFE) closed a $9M ground lease for a 166-unit senior affordable community development with USA Properties Fund in Orange.

🏭 Industrial

  • Expanding markets: Tishman Speyer has entered the South Florida industrial market by purchasing Rock Lake Business Center, a 35-acre industrial park in Pompano Beach, for $100.2 million.

  • Sold: Leon Industrial sold its 60,400-square-foot warehouse near DFW Airport to New Dimension Investments I, financed by a $6.7 million mortgage.

  • Hot market: California-based Bendetti acquired the 257,000-square-foot Proto Park industrial property in northwest Dallas from M2G Ventures, with a 2024 valuation of $16.7 million.


  • To the rescue: Simon Property Group (SPG) and Brookfield Properties (BN) may acquire troubled retailer Express (EXPRQ), submitting an initial bid of $160M in cash and $38M in liabilities.

  • Discount sale: Dollar Tree (DLTR) is still considering selling off or spinning off Family Dollar, a chain with nearly 8K stores nationwide. Here’s who could step up to purchase.

  • Retail Renaissance: Decron Properties expanded its San Diego portfolio by acquiring a 240KSF Mira Mesa Market West retail center for $99M.


  • Sector struggles: The US office CMBS delinquency rate is expected to peak at 11% in 2025, surpassing Global Financial Crisis levels, with Fitch forecasting a slower recovery.

  • Revamp revs up: A 40-story Chicago office building originally built for jewelers is poised for a significant value boost thanks to its newest investor.

  • Billion-dollar deal: Bloomberg's recent Lexington Avenue lease, totaling nearly 1MSF with a diverse tenant mix, surpasses its next 9 biggest leases combined.

  • Portals II: Southwest D.C.'s 71% occupied Portals II project secured a $96.5M loan that will mature in 2037, with major tenants like PBGC and AmeriHealth Caritas.


  • Navigating supply: The hotel industry’s recovery is hindered by continued supply issues, as the US supply remains below average, while China is booming. Meanwhile, India faces challenges.

  • Vegas land deals: Fontainebleau Development aims to buy 5 acres near Fontainebleau Las Vegas for $112.5M. The Las Vegas Convention Authority is currently voting on sale.


The chart reveals a counterintuitive trend in 2024, where occupancy rates are increasing despite a surge in supply, highlighting an unusual market divergence.

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