The National Chicago

Crain’s Chicago Business

The food court gets an upgrade: These spots boast chef-owned stalls

The food courts of yesteryear are giving way to a new form of dining destination: food halls. Rather than clustering fast-food restaurants together in their shopping malls or office buildings, many Chicago landlords are turning to a model in which hip chefs, restaurants and coffee shops sell their wares from rows of small stations.

Owners of some of the largest and most recognizable properties in Chicago have food halls or are planning to add them, including the Merchandise Mart, Ogilvie Transportation Center, Water Tower Place, Block 37 and Willis Tower, which may add a large Eataly-style concept as well as a food hall with smaller individual vendors in a planned ground-floor expansion of the 110-story tower, according to Todd Siegel, a CBRE first vice president who represents New York-based property owner Blackstone Group. Smaller buildings, including the former Chicago Public Schools headquarters in the Loop, are also jumping into the fray.

It’s part of a national trend, fueled by a growing appetite for new culinary experiences. Properties from ballparks to airports are adding more local food choices. Commercial building owners are looking to capitalize on the growing market, adding food halls as amenities for office tenants or to draw in more foot traffic to their malls.

“I don’t think this is a fad,” says real estate investor Michael Marsal, founding partner at Alvarez & Marsal Property Investments. His New York-based firm is planning a food hall—no details yet—in a vintage 23-story office building at 205 W. Wacker Drive that it owns with Chicago-based Ameritus Real Estate Investment Management. “People are moving away from the dingy, low-lit food court with a Taco Bell next to a McDonald’s,” Marsal says. “People are demanding to know what ingredients go into their food and who the chef is.”

Once limited to a few iconic locations, food halls have proliferated in the past two years, according to Los Angeles-based CBRE. More than a dozen major food halls opened in the U.S. in 2015, and at least 14 are expected to open this year, according to a report by the commercial real estate brokerage.

And those are just the mega-sized facilities. Food halls take on various forms, including sprawling, single-brand operations—such as Latinicity in Block 37 and Italian food emporiumEataly off North Michigan Avenue—with a mix of sit-down restaurants, food stations and groceries to go. Food halls also can be open-seating facilities with stalls featuring unaffiliated vendors, such as Ogilvie’s French Market and soon-to-open Revival Food Hall in the former CPS building.

Some traditional office buildings—such as the Franklin, a two-tower complex in the Loop, andFour40, a tower at 440 S. LaSalle St. in the financial district—have added cafeterias with food stations.

Chicago pioneers of the non-chain food court include Lettuce Entertain You’s Foodlife, which opened in Water Tower Place in 1994, and Seven on State on the seventh floor of the Macy’s department store in the Loop. Chefs Rick Bayless and Marcus Samuelsson have restaurants there.

REACHING NEW CUSTOMERS

Landlords view unique food as a way to differentiate their buildings. For chefs and restaurant owners, food halls are a less risky, more affordable way to reach new customers. “Downtown is an expensive place to do business,” says Barry Sorkin, owner of Smoque BBQ, an Old Irving Park restaurant that will open this month in Revival. “If I wanted to do a second (restaurant), I’d need a few thousand square feet of space. Here I only need a few hundred. It’s efficient and cost-effective.”

Jessica Oloroso, owner of Black Dog Gelato, says a spot in Revival is a branding coup, but “also a strategic move on my part to battle seasonality, which is a huge problem for our business.” By having built-in foot traffic year-round, Oloroso hopes to insulate her business from the depths of winter, when fewer customers visit her Ukrainian Village storefront. She also hopes being downtown can help grow her corporate catering business.
Revival is the latest effort of Empty Bottle owner Bruce Finkelman and Chicago developer Craig Golden. Their previous collaborations include Dusek’s, Longman & Eagle and the Promontory. Golden’s real estate firm, Blue Star Properties, is redeveloping the building, which it now calls the National.

Revival’s other vendors include Michelin-star chef Shin Thompson’s ramen shop Furious Spoon, Aloha Poke and Antique Taco. The food hall has a waiting list of vendors interested in filling the ready-made stalls and breaking into downtown from Chicago’s neighborhoods, where rents are cheaper, Finkelman says. “It takes away a lot of the issues that come with owning your own bricks and mortar,” he says. “Chefs and restaurant owners don’t want to be plumbers. They want to cook food.”

A stall can be more easily tweaked by the vendor or replaced by a new one, Finkelman says. Ken Forkish, who opened a branch of his Trifecta Tavern at Pine Street Market in Portland, Ore., this spring, expected to sell mostly croissants and loaves of bread. After weeks of slow sales, he brought in pizza ovens and began selling New York-style pies by the slice. “You build these things and they take on a life of their own,” Forkish says. “If I hadn’t put pizza in, I’d be struggling. You’ve got to be flexible.”

The Merchandise Mart’s owner, Vornado Realty Trust, recently upgraded its food hall and says it is seeking new vendors. New York-based Vornado also says it hopes to open a food market selling wine, meat, cheese, bread, fish and produce.

It remains to be seen how many big and small food halls Chicago can support, but no city has experienced a food hall bubble yet. “New York City is sort of oversaturated, where there’s a food hall on every corner,” Marsal says. Yet, he adds: “They’re all thriving.”