The Wall Street Journal is reporting that restaurants, surprisingly, represent one of the hottest sectors of real estate.  

 “Property owners have long seen restaurants as risky tenants with a high rate of failure. Now, with Americans dining out more than ever, the restaurant business is emerging as the hottest corner of retail real estate. Food services accounted for more than 19% of all retail leases last year, rising in recent years to the highest proportion for any category since data firm CoStar Group began tracking the statistic in 2007. . . It is a far cry from the depths of the pandemic, when tens of thousands of restaurants permanently closed. Four years later, robust restaurant leasing has helped power the retail-real-estate sector to its strongest position in years.”

“It has definitely come as a surprise,” said Brandon Svec, national director of U.S. retail analytics for CoStar. “We wouldn’t have seen as strong of a retail recovery without it.” 

The article pointed out that Restaurant rents and occupancy levels have been rising across the U.S. in recent years. Retail-real-estate firm Pine Tree, for one, said it is signing new restaurant tenants at rents as much as 10% higher than pre-pandemic levels.