As Ghost Kitchens Take Off Parking Becomes a Big Concern

When looking at the best place for a ghost kitchen, the emerging consensus seems to indicate a hybrid model with a food hall may work best. Providing parking space for drivers and spaces for dining inside and outside could work in a post-pandemic world.

“When you think about it logically, there are probably going to be some walk-up customers,” says Jonathan Needell, president and chief investment officer of KIMC.

People have grown more accustomed to eating outside during the pandemic. That probably isn’t going away. “I think a lot of people want to have outside options,” Needell says.

For drivers rushing in to grab orders, walk-up space works well. But as time goes on and the pandemic fades away, delivery may make up less of the share of orders. The convenience and safety of delivery have driven the model during the pandemic.

“It’s a typical economic concept,” Needell says. “You gain utility, which is the safety from COVID, for not having to go out to get your food.”

But parking for drivers and visitors will still be essential. If delivery cars start to back up, or stack, it will draw unwanted municipal attention, according to Needell.

“One of the things that cities pay attention to is the stacking,” Needell says. “In a drive-through, for instance, the city will pay attention to how many cars stack in the line. They don’t want it to stack up and impede traffic and cause accidents at intersections or even in parking lots.”

Industrial areas are not designed to eliminate stacking. That means there needs to be parking to accommodate the drivers.

“It is not originally designed to accommodate the stacking of cars if they were trying to do it [provide food] through a window and not have people come in,” Needell says. “Everyone I’ve seen so far has them get out of their car and go in and get it. In that case, you need parking.”

Parking can also have an impact on other tenants on a property. If one use takes up too much parking, it can hinder a landlord from bringing in other occupants.

“If you have an office building and it has four spaces per thousand square feet and you signed a medical office tenant, you may limit yourself to 85% or 90% occupancy because a medical office requires five spaces per thousand,” Needell says.

Ultimately, the ghost kitchen or food hall needs to offer more profitability than other uses that could use that space. “It depends on the value of the real estate in the area of parking available and what can be done,” Needell says. “If it can be done economically and there’s demand for it, it will be done. If someone tries to force it and over improve it with equity and it doesn’t work, they took the risk to do that. They will benefit from it if it works. And they will not if it doesn’t.”