Houston is home to one of the best and most diverse food scenes in the country. With over 160 national cuisines making up over 12,000 restaurants in the city and surrounding areas at any given time, opportunity for restaurant brokerage is everywhere. Houston is also home to some amazing chefs and James Beard Foundation award winners. In 2019, Houston had 11 Chefs reaching the semi-finals in the James Beard Awards. Restaurants are quickly approaching a $900 billion dollar a year industry nationally, with Houston accounting for over $20 billion a year alone.
Property values continue their steady rise in high profile markets. But smaller submarkets and areas that were once overlooked are noticing record gains and becoming more valuable than ever.
Restaurants add great long term value for their investors. Retail spaces that are built out as restaurants traditionally obtain much higher rental rates than their retail counterparts. Due to the high cost of building out a restaurant from scratch, renters will typically pay a much higher rental rate for a space that was already a restaurant.
Due to this fact, Investors that have restaurant assets will always have a long list of willing and eager buyers ready to purchase the asset from them.
Houston Restaurant Sales Submarkets
Houston has several areas and submarkets that will appeal to all investors!
Montrose will always be a favorite of investors. There are 36,000 residents within this small Houston community, with an average household income of over $150,000 dollars. Due to these statistics, there is an immediate source of local support that is always ready to eat out! Within 3 miles, the population swells to over 200,000 with an average income of $92,000 dollars. Property values have been continuously rising over the past 20 years and there is no reason to think it will stop. For these reasons, Montrose a great core addition for an investor.
We have seen an explosion of new concepts in the Heights in recent years. More desirable areas of The Heights, such as West 19th, and The White Oak Corridor are becoming less available. Therefore, restaurateurs and investors are creating as many opportunities as possible. Much like Montrose, The Heights has a great local customer base. The area has over 57,000 immediate residents with an average household income of just under $100,000. With an influx of younger couples moving into the area, concepts such as Beer Gardens and New American cuisine tend to do well. The Heights ideal for restaurant brokerage; it offers great upside for buyers and an even better return for sellers.
The Highland Village/Galleria area remains one of the hardest markets to break into. This area has an investment deal velocity rate that is generally well below the surrounding markets. If you are looking to buy into this area, the prices will be high, with a lower return than some investors are accustomed to. In exchange, however, you tend to get a safer investment. Restaurants are rarely available to lease due to the strength of the operators, and even rarer to purchase due to the value of the asset. Owners are compensated very well when they finally sell their property.
West University and Rice Village
West University and Rice Village are home to one of the top Medical Centers in the country. With close to 150,000 employees and volunteers in the medical center alone, this area needs more restaurant space than most. The restaurants located closer to the Medical Center tend to be more fast casual in order to serve those employees and volunteers. Working closer to Rice Village, the New American concepts return. Rice Village is another area that investors love. Like the Highland Village/Galleria area, prices are typically higher than most other areas in Houston, but these are generally seen as safe investments. When Second Generation restaurants become available in this area, they are not on the market long. The owner of the building will get a list of qualified buyers willing to pay what is asked for the opportunity to open their restaurant there.
Downtown Houston is changing every day. Over the past decade, more than $9 billion dollars have been invested towards making Downtown the premier place to live and work, not only in Houston, but in the country. With 27 projects scheduled for 2020, Downtown has already added millions of square feet in new office space, thousands of new residential units, hundreds of new hotel rooms, and dozens of new restaurants. Downtown is full of opportunities for investors and sellers alike.
CXRE: Your Restaurant Brokerage Sales Experts
At CXRE, our restaurant brokerage experts can help you find the perfect investment opportunity for your new concept. We can help put together a list of opportunities that best fit your needs. Whether that be location, size, or price, we will do everything we can to make sure you are completely satisfied. If you are looking to sell, we have cultivated a list of active investors that are always looking to acquire their next asset. We go beyond the standard expectations that come with listing a property, and look forward to showing you the CXRE difference!