October 2024 | Sands Investment Group

The casual dining sector is evolving rapidly due to changing consumer preferences and technological advancements. These shifts are going to start having an impact on property values, making it essential for commercial real estate investors to understand how these trends influence investment potential. By aligning investments with the current trends shaping the casual dining landscape, investors can ensure long-term value growth and portfolio resilience.

Enhanced Customer Experiences and Property Value

Today’s diners seek more than just good food—they want memorable, immersive experiences. In response, casual dining establishments are investing in ambiance, expanding outdoor seating, and incorporating entertainment features. Properties that can accommodate these elements can help to increase the value, as they allow tenants to cater to the demand for experiential dining. For investors, choosing adaptable spaces that enhance customer experience can attract tenants who are willing to pay higher rents and sign longer leases. This ultimately boosts the property’s income potential and enhances overall asset value.

Digital Integration as a Value Driver

The adoption of digital solutions such as online ordering, delivery, and contactless payments has become a standard in casual dining. Properties with robust digital infrastructure—like high-speed internet and dedicated pickup areas—are increasingly appealing to tenants who want to stay competitive in the digital age. Doug Roland, investment advisor at Sands Investment Group, notes that with the rise of platforms like Uber Eats and DoorDash, operators have been able to “utilize smaller square footage, less parking, and reduce labor costs. This setup makes for more stable tenants which ultimately reduces investor risk.” Working with SIG investment advisors allows investors to have access to key insights into which tenants and operators are taking advantage of technological advancements and which are not.

Sustainability Enhances Appeal and Long-Term Value

Environmental consciousness is rising among both consumers and businesses. Casual dining establishments are thus seeking eco-friendly, energy-efficient properties. Buildings that offer sustainable features often command higher values because they align with tenants’ goals of reducing environmental impact and operational costs. Sustainable properties attract tenants willing to pay a premium for green features such as solar panels, gray water recycling, and LED lighting, which in turn strengthens tenant retention and supports long-term value growth. Investors who focus on sustainability not only meet current market demands but also mitigate potential risks associated with future environmental regulations, adding to their properties’ resilience.

Multi-Use Spaces Increase Versatility and Value

Casual dining establishments are increasingly interested in spaces that can serve multiple purposes beyond dining, such as hosting events or providing co-working areas. Multi-use properties that offer this flexibility tend to have higher market values as they can cater to diverse tenant needs and adapt to shifting demands. For investors, this versatility translates into greater revenue potential, as such properties can attract a broader range of tenants looking for spaces that maximize both utility and adaptability.

Prime Location and Accessibility as Core Value Indicators

Despite the rise of delivery services, location remains critical for casual dining success. Doug Roland emphasizes that “geography is very important, as properties in high-traffic areas with easy access to parking and public transit continue to attract a steady flow of customers”. For investors, focusing on properties in strategic locations helps maintain strong rental rates and consistent tenant demand. By choosing locations with prime accessibility, investors increase their chances for not only stable income but also long-term property appreciation.

Menu Innovation and Its Influence on Property Value

Menu innovation is another trend influencing casual dining real estate. Diners today are more adventurous, favoring unique, high-quality, and often health-conscious options. Restaurants focused on menu innovation often require adaptable kitchen spaces that can accommodate evolving culinary trends and specialized equipment. Properties with flexible layouts or potential for kitchen expansion appeal to tenants who prioritize menu creativity as a way to differentiate themselves. Investors who recognize this trend can select properties that cater to forward-thinking tenants, enhancing both rental income and property value.

How SIG’s Investment Advisors Provide Value to Investors

Our investment advisors bring valuable insights to investors in casual dining real estate by aligning investment strategies with key market trends. Through expert analysis, we identify properties that are adaptable, digitally integrated, and sustainability-focused, ensuring these assets meet current tenant demands and support long-term growth. By leveraging their deep knowledge of prime locations and multi-use property potential, our investment advisors help investors make informed decisions that optimize property value, attract quality tenants, and enhance portfolio resilience. This strategic guidance positions investors to navigate a dynamic market effectively and secure sustainable returns.

Contact our restaurant team today to learn more about our services and how we can help you achieve your financial goals.

The early education sector is emerging as a hotbed of commercial real estate investment, driven by profound demographic shifts and economic changes. Despite disruptions during the pandemic, demand for modern early education facilities continues to grow, making the future of this property type promising for savvy investors. Let’s explore the key factors shaping this opportunity and why now is the time to invest in the future of early childhood education.

1. Shifting Demographics & Post-Pandemic Recovery

Urban and suburban areas are seeing a surge in young families seeking quality early education for their children. While COVID-19 caused enrollment to plummet—dropping from 54% to 40% for 3- to 4-year-olds between 2019 and 2020—there’s been a steady recovery. By 2021, enrollment climbed back to 50%, and the trend continues upward.

Adam Bridges, Senior Investment Advisor at Sands Investment Group, notes, “We’ve seen a strong bounce back in childcare enrollments post-pandemic, which is encouraging for investors looking at performance at the unit level.”

This recovery presents an opportunity to meet the growing demand for innovative, high-quality facilities, especially as more parents re-enter the workforce. With young families and strong employment rates driving the need for modern learning environments, now is the time to invest in this resilient market.

2. The Impact of Expiring Pandemic Funding

As pandemic-related financial support for early education facilities ends, there’s a shift towards long-term sustainability. During the crisis, many centers relied on federal grants, but now the focus is on operators who can thrive independently.

Bridges explains, “When underwriting a center, we factor out pandemic grant money to ensure long-term viability. Investors need to pay attention to tenant resilience—especially as federal aid is phased out.”

For investors, this makes tenant stability a critical factor. SIG’s research highlights the importance of partnering with operators who are self-sufficient and able to provide stable cash flows. The right tenants will ensure a robust return on investment in a post-pandemic world.

3. Dual-Income Households & the Rising Demand for Reliable Childcare

With both parents working in most households, childcare has become a necessity. This societal shift has transformed early education facilities into essential infrastructure, especially in suburban areas where childcare options are scarce.

“Childcare is no longer a luxury—it’s essential for dual-income households,” Bridges emphasizes. “Investors who cater to this need are not only filling a market gap but also providing a vital community service.”

Investors who develop or repurpose properties into early education centers are addressing a growing societal need while securing solid investment returns. Facilities offering full-day programs that align with parents’ work schedules are in high demand, making them attractive both socially and economically.

4. Economic Resilience & Stability

One of the most appealing aspects of investing in early education is its economic resilience. Unlike other commercial real estate sectors that experience fluctuations, early education remains a steady and essential service. Parents consistently prioritize their children’s education, even in tough economic times.

“Early education is a stable product type with growing operators nationwide,” says Ryan Sompayrac, SIG’s Investment Sales Advisor. “We’re seeing expansion and development in the number of operators and facilities in the education space, making this sector a solid choice for growth-oriented investors.”

How SIG Helps Investors Navigate the Early Education Market

At SIG, we understand the complexities of investing in early education. Our team offers expert guidance in identifying high-quality tenants who can operate independently of short-term financial aid. We closely monitor market trends and policy changes to help investors make informed decisions.

Bridges further highlights, “SIG’s national platform allows us to connect our clients with out-of-state buyers willing to pay a premium, helping them maximize their investment returns.”

By partnering with SIG, investors can confidently navigate the evolving landscape of early education facilities and capitalize on the rising demand in this sector. Whether you’re a seasoned investor or new to this market, our team is here to help position your investments for long-term success.