Houston is home to one of the best and most diverse food scenes in the country. With over 75 national cuisines making up over 10,000 restaurants in the city and surrounding areas at any given time, opportunity for restaurant brokerage is everywhere.
Whether you’re interested in purchasing a restaurant property or want to sell an existing investment, the Houston market is the place to maximize your earnings.
About Houston’s Food Scene
In fact, Houstonians dine out more than almost any city in the nation – 6.9 times per week compared to the national average of 4.9. Yet the average meal price is slightly below the national average.
Houston is also home to some amazing chefs and James Beard Foundation award winners. In 2020, eight Houston chefs and restaurants reached the semi-finals in the James Beard Awards, sometimes referred to as the “Oscars of Food.”
The Houston food scene’s key to success is its incredible diversity. As the most ethnically diverse city in the nation (more diverse than New York City, Chicago, or San Francisco), restaurant-goers have access to nearly any type of food they could possibly imagine.
Why Houston Restaurant Brokerage is a Good Investment
Considering Houston is one of the nation’s fastest-growing cities, investors can expect the restaurant industry to remain strong in the coming decade. As the population increases, so do the dining options and the number of folks frequenting restaurants throughout the city. Some projections estimate Houston could add another one million residents by 2029.
Houston Restaurant Values
While we have seen a slight dip in property values this past year, investors will find ample opportunities for affordable investments. Property values are expected to rise in high profile markets. Meanwhile, once-overlooked smaller submarkets are gaining in popularity, 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 space already built for dining.
Due to this fact, investors who 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
Downtown Houston is a thriving urban area. However, Houston also has several areas and submarkets that will appeal to all investors. These up-and-coming areas represent an ideal investment opportunity for those looking to break into the restaurant market.
Montrose will always be a favorite of investors. This eclectic neighborhood is known for its diverse culture, art scene, nightlife, and restaurants. There are nearly 36,000 residents in Montrose, with an average household income of over $150,000 (nearly triple the average household income for greater Houston). With a large population and significant disposable income, Montrose represents a demographic ready and willing to dine out. Within three miles of the Montrose neighborhood, the population swells to over 200,000 residents, with an average income of $92,000.
Property values in this area have been continuously rising over the past 20 years and there is no reason to think it will stop. Montrose restaurant real estate is a great addition to your investment portfolio.
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 for investors. Therefore, restaurateurs and investors are hurrying to find available properties before the inventory disappears.
Much like Montrose, The Heights has a great local customer base. The area has nearly 40,000 immediate residents with an average household income of over $127,000. 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 is 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 most competitive markets in the Houston area. 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 might expect. 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.
The Highland Village/Galleria area population has grown some 11% in the last decade. The median household income in this area is approaching $175,000, giving restaurant owners consistent access to high-paying clientele. This area also features upscale dining and retail options, making it an ideal location for investment properties.
West University and Rice Village
West University and Rice Village are home to both Rice University and 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 fast service casual in order to serve those employees and volunteers quickly.
Nearer to Rice Village, the New American concepts return. Rice Village is another area popular with investors, thanks to increasing population growth. Rice Village and West University are home to many young families and young professionals.
Like the Highland Village/Galleria area, property prices here 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 the asking price, as many welcome the opportunity to open a restaurant in this district.
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 new projects slated for 2021, Downtown Houston is constantly expanding. 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 in the past few years.
With a growing population and rising property values, 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 your restaurant property, 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!
Contact one of our brokers today to learn more about our offerings.