REAL ESTATE NEWS

The food truck segment might be a forgotten part of retail, but the growth continues to be robust. Over the past five years, revenue in the sector has surged by a compound annual growth rate of 13.2 percent, with the total volume projected to hit $2.8 billion this year, according to a report from IBISWorld.

As demand has picked up for food trucks, U.S. Realty Partners is adopting a new concept called Dining Lot in Hawaii, at Lahaina Cannery. It's the country's first-ever indoor food truck hall that's located in a shopping center, which features five full-service vehicles and one bar truck, according to the investment firm.

FROM COURTS TO TRUCKS

Jay Kerner, president and CEO of U.S. Realty, noted that the idea was inspired by the pandemic, as the company was attempting to figure out how to serve food to the Lahaina community in Maui, as indoor dining was shut down. It then found success with serving customers through food trucks in a parking lot. Interestingly, Kerner noted the firm originally had plans to invest in building a new food court in the Lahaina shopping center that's anchored by grocery and drug stores — but the success and the disruptions caused by Covid made it rethink that.

At first, it was just floated as an idea as U.S. Realty's boss explained: "In our leasing discussions with our team, Kimo Greenwell, with CBRE, who does our leasing here, he said, what if instead of building the new food hall, you just bring the trucks inside?"

What once sounded like a joke, then all of a sudden turned into serious action. U.S. Realty, which also operates on the West Coast in the nation, needed to find a vendor it was comfortable with and that was qualified, which happened to be in Sylmar, California, which lies just outside of Los Angeles. The company had the food trucks built there and transported them to Maui. The process, which included obtaining the permits and inspections for the trucks, took almost five years, according to Kerner.

"We brought them into the mall. We had to take out a whole storefront to do that for one of the entries, but it was one we were going to replace anyway," Kerner explained.

USING A SMALLER RETAIL FORMAT

And last week, Dining Lot officially debuted. U.S. Realty describes the new venue as an area that aims to offer both "comfort and convenience."

"It's not like a toblin mall or general growth mall, where it's a million square feet, and it's on three levels," Kerner depicted of the entire mall.

"This is all on one level. The grocery store and the drugstore are outside, and some of the shops are outside, and then we have this enclosed portion, which has a bunch of other shops and restaurants in it, and it all kind of works together."

Some of the brands that operate in the mall include CVS' Longs Drugs, Safeway, as well as several other restaurants, shops and services. The list of food trucks at the mall includes Gourmandise, Sushi Ko, Ganotisi, Sergio’s Cantina food truck, Sergio’s Cantina bar truck and Thai Ono. U.S. Realty, which first bought the property in June 2016, expanded the Safeway to 65,000 square feet. Kerner called it a "game changer," because the store was outdated at the time.

"It increased the volume dramatically from an already high volume, and that spills over to other tenants within the center as well," he said.

"The location is great. We're right near all of the major hotels, condos, town homes and short-term rentals in West Maui."

INDOOR FOOD TRUCKS ARE JUST A TEST FOR NOW

But Kerner admits that Dining Lot will act for now as an "experiment", as the developer has yet to try implementing this type of concept in other U.S. cities. To make it work, a "good density of people is needed," while the size of the shopping center matters too, he added. But Kerner does see food truck pods, a concept usually in an outdoor setting with amenities, picking up on the West Coast, including in states such as California, Oregon and Washington.

"The challenge for a lot of the more traditional, big enclosed malls is just that the food courts usually are on the first level. Getting the trucks in there and making that happen is a little more challenging," Kerner noted.

"But, it could be something that is done in other enclosed, small areas as well."

So far, the perception from the community regarding Dining Lot has been welcoming, according to Kerner.

"The tenants are busy, very happy with how things are going from a sales standpoint," he emphasized. Speaking of tenants, he added that the investment for them is quite minimal compared with other retail concepts, making it even more appealing.

Overall, across its 16 retail asset portfolio, Kerner said the property performance is holding strong, despite the economic concerns and volatility. Now we'll see if that holds and if indoor food truck halls develop into the next big trend across retail.

Source: GlobeSt/ALM