Good food is bringing people to the mall. And they're spending more money when they get there

Key Points
  • Mall owners are talking about food as more retailers leave behind vacant real estate.
  • Food courts are being replaced by food halls, where the fare is trendier, healthier and often rotates in and out of the space.
  • Class-A malls in the U.S. are dedicating about 25% or more of square footage to restaurants, according to Cushman & Wakefield.
Customers hang out near the front window photographed at Taste of Urbanspace on the third level of Tysons Galleria in McLean, VA on March 16, 2019.
Deb Lindsey | The Washington Post | Getty Images

Hungry shoppers want good food. And it's likely they'll stick around and shop once they eat, benefiting both retailers and real estate owners that are taking note of this.

The talk of the biggest gathering of retail real estate professionals in the world, organized by the International Council of Shopping Centers and happening this week in Las Vegas, is food, according to a handful of people attending the show.

A study released Monday at ICSC's RECon by commercial real estate services firm Jones Lang LaSalle found that 40% of customers will choose a center to shop at based solely on the food there, and nearly 38% of people want healthy options. The study surveyed more than 1,500 U.S. adults in March.

Getting people into the mall with good food often means they'll spend more, too, JLL found.

Transactions increase as much as 25% at malls with quality food-and-beverage options, JLL said, and shoppers who eat at the mall are spending up to 15% more per trip.

"With more focus on foodservice in shopping centers than ever before, shopping center owners must not oversupply the market with tired formats," JLL said.

The American Dream mall, being developed by Triple Five Group and set to open this fall in New Jersey, is said to incorporate the first-ever entirely Kosher-themed food hall in the U.S., an example of one unique format coming to market.

Mall owners are increasingly building out food halls with local chef-driven eateries, sushi bars and premium coffee shops, as retailers such as Payless ShoeSource, Gymboree and Charlotte Russe close up shop, leaving behind empty real estate.

In 2006, an average mall in the U.S. had roughly 10% of its square footage devoted to food, beverage and entertainment, according to commercial real estate services firm Cushman & Wakefield. Last year, that statistic had risen to about 20%, Cushman said. And it is expected to grow.

For the so-called class-A malls in the U.S., which bring in more sales per square foot than peers, the number is even higher — about 25% or more of square footage is devoted to restaurants, according to the firm.

"We've done a 180-degree turn from this philosophy in place 10 years ago, where [mall owners] put in a food court, but shoppers were there primarily to shop, and the food court was just an amenity for refueling," said Garrick Brown, a retail real estate analyst for Cushman. "Now, I will go to the mall because there is really good food there. It's a reversal from the idea that the food is an amenity. Now, the food can drive traffic."

But Brown isn't talking about Sbarro pizza, Auntie Anne's pretzels and Great American Cookies, though those will always be considered childhood favorites.

Food halls are replacing food courts, morphing to meet the changing tastes of consumers. What's the difference? A food hall is basically the "grown-up" version of its predecessor. The food there is trendier, healthier and often rotates in and out of the space.

At Gotham West Market in New York, for example, restaurants serving everything from seafood and burgers to tapas and tacos to ice cream have been moving in and out, month to month, as the kitchens and preparation areas are shared and offer that flexibility, unlike standalone restaurants.

Cushman estimated in 2016 there were roughly 120 food halls — some still under construction and some already open — across the country. By the end of 2020, that number is on track to nearly quadruple, to 450, Cushman said. And while not all of those are within shopping malls, a lot of them are popping up there.

Brookfield's Tysons Galleria mall in Virginia has a concept on the third floor of the mall called "Urbanspace at Tysons Galleria" that's brought in some favorite eateries from the Washington, D.C., area, such as Lady M cakes, Sen Khao noodles and Ice Cream Jubilee. And the Hudson Yards mall in New York, developed by Related Cos. and Oxford Properties Group, has a massive Spanish-themed food hall on the lowest level. At the Esplanade at Aventura mall in Aventura, Florida, Seritage is constructing a Latin American-themed food hall called "Mixtura Market."

"Five years ago we wouldn't have been talking this way ... not about health and wellness, and dining and entertainment," said Joe Coradino, CEO of retail real estate investment trust and mall owner PREIT, which owns more than 20 malls across the U.S., including Cherry Hill Mall in New Jersey. "But millennials want dining and entertainment. Then it morphs into Gen Z. And they are becoming mall rats."

"Now 25% of our portfolio is dining and entertainment," Coradino said.

Experience over shopping: Making malls hot again
Experience over shopping: Making malls hot again