Fine Dining Very Much in Focus in CRE Right Now

✅ What’s happening

1. Restaurants (including upscale) are driving retail-leasing momentum

   • In places like Manhattan, food & beverage (F&B) space has made up a significant portion of retail leasing: since 2010 F&B has accounted for ~ 34 % of Manhattan’s retail deals. nyccrea.com+2CRE Daily+2

   • Across the U.S., F&B tenants accounted for more than 19% of all retail leases in recent years — the highest since tracking began. LinkedIn+1

   • Retail vacancy/availability is dropping in many urban core markets because restaurant demand is strong — for example in NYC retail availability hit ~12.8% in Q2 2025, the lowest since 2014. CRE Daily+1

2. Fine dining (and experiential restaurants) enhance property value

   • Upscale dining can act as a “destination” use in mixed-use developments, drawing foot traffic, boosting time spent on-site, and supporting surrounding retail and hospitality uses. CommercialSearch

   • One example: In NYC, a major cultural institution (Sotheby’s) is opening a fine-dining French concept inside its HQ building, showing how restaurant use is weaving into higher-end CRE deals. Eater NY

3. Demand for “kitchen‐ready” spaces & conversion opportunities

   • Because many prime retail spaces don’t come built as restaurants, tenants are willing to invest in infrastructure (venting, exhaust, kitchen build-out, etc). In NYC: many restaurant tenants are converting non-kitchen space and paying large sums for build-out (e.g., ~$100K mentioned) to get venting and kitchen facilities. CRE Daily+1

   • This creates opportunities (and risks) for brokers and landlords: identifying properties that can be adapted for fine-dining use becomes a value-add.

4. Differentiation amid post-pandemic environment

   • The pandemic accelerated changes in how people use retail and dining spaces (remote/hybrid work, fewer commutes, higher delivery/ take-out). Upscale dining experiences that offer ambiance, social experience, special occasions are more resilient in some markets.

   • Some fine dining closures (e.g., legacy restaurants) also create repositioning potential for the real estate. For example, the closure of a long-established fine dining spot in Chicago opened up sale/lease opportunities. Eater Chicago

⚠️ But there are caveats / risks

• Fine dining has higher build‐out costs, fixed overheads, and is sensitive to consumer spending shifts. Some upscale restaurants are closing due to rising costs and changing behavior. The Washington Post+1

• Retail & restaurant site supply is tight: in many markets, there simply aren’t many viable spaces left — brokers describe a “feeding frenzy” for restaurant-ready retail space. Bisnow+1

• The asset class (restaurant real estate) is still considered higher risk than standard retail, so underwriting needs discipline (tenant credit, lease structure, build-out allowance, etc). LinkedIn

🧮 In summary

Fine dining and upscale restaurant activity is very much in focus in CRE right now because:

• customers are spending more on dining out, which boosts demand for space;

• restaurants are increasingly seen as anchors or complementary uses in retail/mixed-use assets;

• there’s a scarcity of restaurant-ready space, which increases competition and value;

• fine dining brings higher foot traffic, which benefits the broader property;

• but there are higher risks, build-out costs, and tenant logistics to manage.