New York City’s restaurant industry is currently experiencing a rare leasing boom, driving a rapid recovery in local retail real estate. From fast-food chains and pizza shops to large steak houses spanning thousands of square feet, spaces for various types of restaurants are being quickly snatched up. Lee Block, the CEO of real estate company RTL, told the Wall Street Journal that these types of properties are leasing quickly.
Due to limited space, many business owners are willing to invest up to $100,000 to convert retail storefronts into restaurants, especially those that can be equipped with exhaust systems. Brandon Singer, founder of consulting firm Retail by MONA, described, “As long as they can install ventilation, the space can be rented out.”
According to statistics from Cushman & Wakefield, in the second quarter of 2025, the vacancy rate in Manhattan’s 11 major retail districts dropped to 12.8%, hitting a new low since the end of 2014.
The key to the surge in demand lies in the increasing dining expenses among Americans, especially the Millennial generation, who are marrying and having children later, resulting in a higher proportion of eating out. Chain brands like Cava, Naya, Joe & the Juice offer pre-ordering app services, saving time and gaining popularity. Young customers also prefer “experiential” restaurants where they can check in, such as the popular ice cream brand Anita Gelato.
Statistics from New York City show that in the first quarter of 2025, the total consumption from five delivery apps including Grubhub and Uber Eats exceeded $120 million, reaching a new high. The city government has been tracking this data since 2022.
Over the past decade, the restaurant industry has consistently led the leasing market in New York commercial real estate, accounting for at least 35% of the total leasing area. Steve Soutendijk, Vice Chairman of Cushman & Wakefield, pointed out that restaurants are not afraid of the impact of e-commerce and are resilient.
Cocktail bar BarChef, known for its intricate plating and homemade ingredients, has garnered hundreds of thousands of views on Instagram, with drink prices ranging from $23 to $43, and weekend reservations often fully booked two weeks in advance.
The National Restaurant Association estimates that total restaurant sales in the United States will reach $1.5 trillion in 2025, a $400 billion increase from the previous year.
Despite strong demand, New York restaurant rents remain generally lower than pre-pandemic levels. The outbreak of the pandemic in 2020 led to businesses closing down, causing rents to be reduced by nearly 20%. Consultant Meghann Martindale of Avison Young expects that rents will continue to rise as supply and demand shift.
Meridian Capital Group points out that in popular areas like the Lower East Side and East Village, a vacant storefront can attract 5 to 10 bidders within a few days.