Fast Food Leading Retail Growth

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Mayor Bloomberg take note! For all of your good intentions--and money spent to fight King Sugar--fast food is the retail category with the most planned openings in the U.S. this year. Subway, Quiznos, Five Guys Burgers and Fries, Papa John's and Dunkin' Donuts are all planning multiple outlets.

"Restaurants/food concepts will account for approximately 40 percent of all new tenancy in the marketplace in 2013," based on unit counts, not square footage, said Atlanta-based Margaret Caldwell, managing director, Jones Lang LaSalle Capital Markets.

Restaurants are leading a strong growth spurt in retail. New store openings are expected to hit a four-year high this year, Ms. Caldwell says.

There are many reasons why fast food chains are planning so many openings, says Lori Schneider, senior vice president, Marcus & Millichap, Ft. Lauderdale. "These fast food tenants are credit worthy, they fared well during the recession and they generate traffic for a shopping center," she said.

According to Retail Lease Trac, a retail tenant director that tracks store openings, the 2,794 retailers in the company data base plan to open 81,467 stores in the next 24 months.

Besides fast food, the other retail categories that are doing well include sporting-related outlets such as LA Fitness and Dick's Sporting Goods. "Health clubs are a social outlet and cheap entertainment, which is why they are so popular," Ms. Schneider said. Plus, fitness centers are excellent co-tenants, she says. "Their parking patterns are counter-cyclical to peak shopping hours and they have as many or more repeat visits as grocery-anchored tenants," Ms. Schneider said.

Discount stores are also doing well. Family Dollar is planning to open 1,000 stores in 2013 and 2014.

The health/fitness/nutrition category is another growing category, with 1,663 stores scheduled to open this year, a nearly 5 percent increase from last year. And the category known as food and beverage-specialty, with 48,887 stores, expects to open 4,576 new stores, a nine percent increase.