Restaurants Clamor for Space in New York

BY REDMOND BERNHOLD

Demand for restaurant space in New York City has rarely been greater than it is now, helping power the city’s retail real-estate recovery.

Space for quick-service, casual restaurants like Chipotle Mexican Grill and Cava, cozy pizza joints or cavernous 10,000 square-foot steakhouses are all disappearing fast, said Lee Block, president of real-estate firm RTL.

The amount of available space is so tight that more restaurant tenants are willing to splurge on the steep costs— often around $100,000—to convert other types of retail real estate into kitchens by adding vents to the properties.

“If you can vent it, you can rent it,” said Brandon Singer, chief executive and founder of Retail by MONA, a real-estate advisory company.

Retail availability rates during the second quarter fell to 12.8%—the lowest rate since late 2014 across 11 of Manhattan’s busiest retail neighborhoods, according to real-estate company Cushman & Wakef ield .

The restaurant boom is a big reason why. Americans are spending more time and money at restaurants. And millennials’ tendency to marry and have children later than previous generations has likely contributed to increased restaurant spending in recent years, analysts say.

In New York, quick-service restaurants such as Cava, Naya and Joe and the Juice offer a popular app that allows customers to order ahead so their food is waiting for them when they arrive.

Young customers are also generally drawn to experiencebased restaurants where they can easily post on social media, according to many owners and market analysts.

Total consumer spending in New York City from five popular food delivery apps, including Grubhub and Uber Eats, reached over $120 million—a record high—during the first quarter of 2025, according to NYC Department of Consumer and Worker Protection’s most recent data. The city began tracking food-delivery services during the first quarter of 2022.

For the past decade, food and beverage tenants have surpassed all other retail sectors in leasing, accounting for at least 35% of New York City’s total leased square footage.

Other retailers increasingly contend with online competitors, said Steve Soutendijk, vice chair at Cushman &

Wakefield. But it is difficult for digital vendors to compete with the quantity and variety of New York City’s 29,000 restaurants.

“They’re ecommerce-proof,” he said.

Specialty food shops with large social-media followings draw some of the biggest crowds. KJ Cline decided to check out Anita Gelato in New York City’s NoMad neighborhood after seeing viral socialmedia posts showing strawberry, vanilla and salted--caramel scoops of gelato stacked a few inches high.

When the 26-year-old documentary filmmaker arrived on a recent Tuesday evening, a line of nearly 30 people stretched around the corner. Many of the people queuing up scrolled through TikTok for a flavor recommendation.

It took 20 minutes and $10 for a scoop of stracciatella. Some might see that as a steep price for gelato, “but it’s not going to stop me from getting it,” Cline said. Frankie Solarik, co-owner of cocktail lounge BarChef in Midtown and a judge on Netflix’s “Drink Masters,” said Instagram posts showcasing elaborate presentations and homemade ingredients are receiving hundreds of thousands of views since BarChef’s opening in June.

Prices for signature cocktails range from $23 to $43, and reservations are in very

high demand, with nearly full bookings for weekends two weeks out.

“Consumers are still willing to go out and spend the money, as long as there’s value and there’s a visceral element,” Solarik said. “You’re not just going out and having a vodka soda.”

Every year since 2020 has seen more spending on food away from home, per capita, according to the Agriculture Department’s Economic Research Service.

Total eating- and drinkingplace sales are expected to reach $1.5 trillion this year, up $400 billion from 2024, according to the National Restaurant Association.

Despite heavy demand, rents for New York restaurant space are still lower than before the pandemic. When people fled the city in 2020, demand plummeted and restaurants were forced to close. Second generation spaces flooded the market, and landlords lowered rents by nearly 20%.

Most rents remain below prepandemic highs. But they are likely to increase further in the near future, said Meghann Martindale, principal and director of market intelligence and retail at Avison Young,

a commercial real-estate firm. In trendy neighborhoods, especially in the Lower East Side and East Village, one listing draws five to 10 offers within a few days, said James Famularo, president of retail leasing for Meridian Capital Group. David Wilson, co-owner-operator of Baby Sips in the Lower East Side, said his affordable natural wine bar was a new endeavor for the upand- coming neighborhood, which helped him secure the space that was a bike courier office.

“It could be prime real estate in the next few years, but we got here now,” he said.