Developers Need to Consider 'Quality and Diversity' for Food Courts

Food court development is becoming more prevalent with commercial real estate projects but failure to operate them correctly could lead to deficiencies.

According to a U.S. analysis from IBISWorld, the food courts and halls sector, which serves food establishments in malls or other big spaces, has grown 8.7 percent to $574 million, from 2019-2024.

NOT JUST ABOUT MALLS

Brad Zackson, co-founder and director of development for real estate firm Dynamic Star, told GlobeSt. that  food courts are evolving. It’s no longer just your McDonald’s at the mall after taking a break from shopping.

“Today, the quality and the diversity that you get in some of these places are amazing, the real estate veteran, who focuses on Tri-state area markets, said.

Different types of food can be found for anyone from Korean to Portuguese styles.

Food courts also work well with mixed-used projects with just about any real estate asset class from office, to hospitality, and residential. It all adds an element of convenience for consumers.

“Residential always does well,” Zackson specifically pointed out.

“Every building I lived in the city, there was always something right downstairs. I lived in 20 West 64th Street, they had restaurants all on Broadway.”

For example, there’s The JACX 1.2 million office property in Long Island City, Queens which offers a food court that Dynamic Star does business with.

Along with calling the project “very successful,” Zackson said “from our point of view, it starts to make the neighborhood our Tennessee, we have an office building, and we have expanded our retail opportunity there right now because we’re seeing Long Island City exploding with the need for retail.”

QUALITY AND DIVERSITY IS KING

While the food court poses promising potential for developers Zackson warned that certain concepts could fail. He emphasized the need for “food quality and “diversity.”

“New Yorkers expect quality, and if it isn’t quality and it isn’t clean, you’re not going to be successful,” Zackson stressed to food court operators.

Plus, food court developments are going to work best in urban areas. For New York, these projects could perform well in Brooklyn, Queens, Bronx, and Manhattan.

But Zackson referred to New York City as a “complicated” market, given its diversity. Playing to the demographics is vital.

“You got to be on the top of your game,” Zackson said regarding food court operators in the region.

“Our clients are from all over the world, and they want to experience that their own culture, [and] other cultures.”

OPPORTUNITY REMAINS

From Zackson’s point of view, the environment is favorable for tenants might be able to score good rents.

“What we’re thinking with our food tenants and our development is percentage leases to bring in the best talent, but not overbearing with the rent,”

Zackson believes this is a healthy combination between landlord and development to have success with a property.