Due to the influx of millennials and the
increasing influence of Generation Z
are just starting to come into adulthood), restaurant
growth is driven by concepts that are hip, quick, healthy,
specialized and require minimal waiting, no tipping and maybe
even have their own secret menus (Cotton Candy Frappuccino
anyone?). Chipotle, Raising Cane’s, Chick-Fil-A, Starbucks, Café Rio and
others are aggressively expanding across Arizona, often to the detriment of
the traditional fast food powerhouses and casual dining chains. It’s a race to
establish their brand as the dominant in their category. Like the past, the trendy
categories continue to evolve from many independents to a few chains, as we saw
with frozen yogurt shops, fast casual burgers, quick serve customized pizza, and one of
the newest concepts: quick serve poke cuisine.
These younger generations like to eat out
a lot, but they are more frugal and don’t care to spend much on clothing and other items. This,
along with the growth of online sales, home delivery, and virtual or cloud-based products, has made
it challenging for property owners to backfill spaces in many Class B and C retail properties.
The bright spot today for new construction
in Arizona is grocery store-anchored centers,
which began in earnest in 2016. Fry’s started to roll out new stores for the first time in many
years. Sprouts and newcomer, Natural Grocers, have also opened multiple new stores. Safeway
recently announced several new stores and WinCo continues to pursue new sites selectively.
The demand for shop space in grocery-anchored centers is more limited, so the new
centers are generally smaller than in the past.
Beyond food service concepts,
health and wellness concepts are one
of the few segments taking up small shop space. Concepts like Orange
Theory, Pure Barre, Red Mountain Weight Loss, Gentle Dental and
Nextcare take spaces that historically went to retail stores.
promises to be an interesting year at the very least, but we remain
excited and optimistic for what this New Year brings.
Commercial Executive Magazine
on 10 years of success and a tireless commitment to
the Phoenix commercial real estate market.
9617 N. Metro Parkway W. Phoenix, AZ 85051