Food halls stoke small business success, community growth
The swirl of people grabbing fresh plates of Korean barbecue, seafood gumbo, chorizo tacos and crispy Bmore Brd sandwiches is just one demonstration of a hot trend in a shifting retail sector.
Even though 2019 recorded high numbers of closures among chain restaurants and retailers, food markets and food halls like Baltimore’s R. House enabled small, specialized, locally-owned food vendors to thrive.
Seawall Development created R. House as part of broader efforts to revive Baltimore’s Remington neighborhood.
“Seawall’s vision from the beginning was that real estate can bring people together and provide a launch pad for ideas that change communities…and we recognized that an incredible way to change communities is to empower entrepreneurs through their spaces,” said Katie Marshall, Director of Communications.
Seawall had heard Baltimore chefs and food entrepreneurs discuss the barriers they face to opening their own restaurants due to large upfront costs and high business risks in the food and beverage sector. A food hall, however, could “de-risk those ventures somewhat and create a collective energy by bringing a lot of people together in a space to grow their businesses,” Marshall said.
That space has since enabled food entrepreneurs to establish successful businesses, expand to additional locations in Baltimore and test out new concepts in R. House’s pop-up space.
Creating that success, however, requires developers and operators to offer support that exceeds the standard services provided to commercial or retail tenants.
Seawall – which also developed Union Collective and DE.CO food hall in Delaware, and recently secured financing to redevelop Lexington Market – has grown its array of services to include centralized bussing, cleaning and other operations to free up entrepreneurs to focus on their product.
The company offers tenant improvement allowances, small business coaching, advice on merchandizing and menu development, and connections to outside resources, including financial institutions and industry groups.
At Whitehall Mill, Terra Nova Ventures is offering similar counseling and support as well as tailored financial opportunities to small companies joining its food hall.
“We put together a financial package that will allow these entrepreneurs to grow their business without being overly burdened initially,” said David Tufaro, Founder of Terra Nova Ventures. “We either set low fixed rent or, in some cases, no fixed rent for a period of time when they are just paying a percentage of sales as rent.”
Food halls and food markets, Tufaro said, can challenge a developer’s budget (and raise questions with financiers) until the vendors become established and profitable. It requires the developer to become more actively involved in supporting a tenant’s business development and to devote considerable time to identifying and attracting the right mix of food vendors to a site.
Whitehall Market which enjoys the benefit of being part of a mixed-used development, has attracted a gourmet caterer, bakery, artisan cheese maker and other specialty food businesses but still hasn’t landed one desired tenant, an Italian deli.
Tufaro, however, says the effort is worthwhile. “The big picture to me is Baltimore has a history of food markets… People enjoy shopping with local, independent, specialty sellers. Once you find your niche, there is always a place for good retail.”
The rise of privately-owned food halls and food markets has presented “a big marquee to the public markets to say ‘raise your bar,step up your game’,” said Robert Thomas, Executive Director of Baltimore Public Markets.
The organization is in the process of renovating and updating the city’s public markets to satisfy changes in demographics, retail offerings and consumer preferences. No longer the sole local source of basic foodstuffs, Baltimore’s markets have expanded opportunities to satisfy appetites for more prepared foods, niche cuisines, specialty items, locally grown food, food education, neighborhood events and public gathering spaces.
The 2019 renovation of the Broadway Market’s North Shed, for example, is supporting bustling operations for 10 vendors, reenergizing the block with its indoor and outdoor gathering spaces, and funneling customers to surrounding businesses.
“We have seen the impact almost immediately when the renovated markets go live,” Thomas said. “There is more foot traffic, sometimes more vehicular traffic. There is new life in the property that overflows to connecting areas and businesses.”
Originally published in January/February 2020 NAIOP-MD InSites.