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One attraction still drawing shoppers to malls: Food

Original article published on Yahoo! Finance via CNBC


You might’ve noticed more and more mall food courts are changing, ditching fast food chains for local eateries. And that’s not an accident.

Mall owners say they’ve been steadily increasing the percentage of retail square footage at any given property dedicated to food and beverage, creating new food halls. The push to make these changes is compelling , industry experts have told CNBC. The goal is to drive traffic to the property and keep shoppers lingering longer.

“Every landlord today is thinking about increasing the percentage of [gross leaseable area] to food,” Naveen Jaggi, head of the retail advisory business in the Americas at commercial real estate services firm Jones Lang LaSalle, told CNBC. “The old model of having a food court … it was a precursor to having a food hall.”

Food halls, unlike food courts, often include a bar, which can appeal to a younger audience. Some mall owners, like Washington Prime Group , are going as far as adding their own craft breweries . Gone are traditional fast food chains like Wendy’s , Subway and Burger King . Instead, there’s an emphasis within food halls on local restaurateurs, healthier options and eclectic fare.

Forty percent of consumers today will pick a mall or shopping center to visit primarily based on the restaurants located there, according to a new report from JLL. And younger shoppers are turning to new brands like Sweetgreen, Bareburger and Cava Grill for a meal. McDonald’s won’t cut it.

Further, customers who eat at the mall will then spend 35 additional minutes, on average, browsing stores than the person who doesn’t eat there, JLL found in surveying retail properties across the globe. That’s good news for landlords and tenants.

JLL said it also sees the biggest spikes in foot traffic at those retailers’ stores situated right near the food options, making it an attractive strip of real estate.

“What we are hearing from millennials is they want authentic dining experiences,” Jaggi said. “There’s a direct parallel between the quality of food and time spent in a mall.”

Mall owners have been more and more vocal about their plans to upgrade food offerings.

GGP , for example, has said only 25 percent of its future deals with tenants will be for apparel (based on gross leaseable area), compared with more than 50 percent in 2015. Food is expected to account for about 22 percent of deals moving forward, according to GGP. It used to be just 11 percent.

Macerich , Taubman , Simon and PREIT — the publicly traded U.S. mall owners with some of the highest-quality assets in their portfolios (based on sales per square foot) — have said more of the same recently. The trend is really just beginning to pick up steam, with many redevelopments coming down the pipeline.

Simon’s Aventura Mall in Aventura, Florida, late last year was remodeled to include a massive food hall, bringing in a dining concept curated by celebrity chef Todd English,Shake Shack , Luke’s Lobster, Blue Bottle, Joe & The Juice, and a handful of other local options serving poke bowls, ceviche and Mediterranean-inspired meals.

GGP has been testing a pop-up food hall known as FOMO, which stands for “fear of missing out.” At the first FOMO location at GGP’s Northbrook Court in Northbrook, Illinois, restaurants are rotated in and out of the space, sometimes on a daily basis. One of the FOMO restaurants was “Blind Cafe,” where customers have dinner in the dark to experience what it’s like to be blind.

Melinda Holland, senior vice president of business development at GGP, told CNBC the response to FOMO has been overwhelmingly positive, and the REIT plans to take it to other malls.

“Food and entertainment … are the new traffic drivers,” Lawrence Group Chief Executive Officer Steve Smith told CNBC. He’s helped bring in new food and beverage options to a mixed-use development called City Foundry STL in St. Louis’ historic midtown district. “We want to be local, not national … especially on the food side.”

PREIT’s Fashion District Philadelphia, currently under construction, will include a whole host of local eateries with a big emphasis on farm-to-table, CEO Joseph Coradino has told CNBC. The area, known as “Market Eats,” will feature outdoor seating with food carts, a made-from-scratch pizza spot, a sports bar and bakery, among other options, he said.