Why are food and agriculture becoming more important parts of real estate development projects? Attendees at a session at the 2016 ULI Fall Meeting in Dallas learned that growing, processing, and selling food in development projects can pay big dividends for savvy developers as well as for consumers, communities, and the environment. From rooftop gardens, to fresh food markets to urban grocery stores, to residential developments designed around working farms, food is providing a growing arena for innovation in real estate.

food-forum-report-coverThe session, “Food and Real Estate: Cutting-Edge Trends,” provided an overview of trends and opportunities at the intersection of food and real estate and showcased the Institute’s new report on this subject, Cultivating Development. Both the new report and the Fall Meeting program examined the food and real estate issue from the perspective of people, profit, and the planet. Acting as the moderator, I set the stage by describing six distinct food-centric development types: agrihoods, food-centered mixed-use development, food-centric residential development, food hubs and culinary incubators, next-generation urban markets, and policy innovations and innovators.

I also linked the growing investment in food-centric real estate to related trends in health, sustainability, organic food, and buying local. In addition, I said that “growing, buying, and eating food can all be social activities” and that “young people seem to prefer experiences more than stuff.” Add this to the fact that most of us eat three or more times a day, and as a result, food is becoming a much bigger part of both commercial and residential development.

Following this overview, the panel kicked off with a presentation by Lara Hermanson, the principal and co-owner of Farmscape, a San Francisco–based company that designs, builds, and maintains community gardens. One of the big take-homes from Hermanson’s presentation was that small projects can have a big impact. What’s more, most community gardens of the type installed by Farmscape take just a few weeks to install and only cost between $150 and $1,000 per week to maintain, depending on size. The installation costs for a typical urban garden average around $20,000, which is about the same as a standard landscaping contract.

The second panelist at the Food and Real Estate Session was Jeffrey Schwartz, the executive director of Broad Community Connections, a nonprofit community development organization in New Orleans. His presentation focused on the Refresh Project in New Orleans. This project in the city’s Mid-City neighborhood is using healthy food to drive improved neighborhood health and economic development outcomes. Created on the site of a lot that had been vacant since Hurricane Katrina, the Refresh project includes a 27,000-square-foot (2,500 sq m) Whole Foods Market, as well as seven nonprofit organizations that are focused on improving community nutrition and providing job training and youth and outreach services.

According to Schwartz, the project has been a win-win for Whole Foods, the neighborhood, and the residents. His big take-home was that a “market exists for high-quality grocers in low- and moderate-income areas” but that “a grocery store alone is not sufficient to move the needle on diet-related chronic diseases.” This is why the Refresh Project also includes wrap-around services that demonstrate the links between food and health, through activities like classes that teach cooking, nutrition, and meal planning.

The third presenter was Ann Taylor, a vice president at Midway, a Houston-based real estate development company. Taylor showcased several of Midway’s award-winning projects including City Centre, a 50-acre (20 ha) redevelopment of a failing shopping mall. Unlike the mall, which was anchored by department stores, City Centre is anchored by a large and diverse mix of restaurants, a public plaza that hosts a wide array of food and health-focused events, and a popular fitness facility.

The restaurants placed around the plaza and on the ground floor of mixed-use and office buildings serve to activate the street and help create a lively, walkable district that encourages shoppers to stay longer and come back more often. In commenting on the success of this strategy, Taylor quoted Midway’s chairman, Brad Freels, as saying that “you buy a sofa once a decade. You buy clothes several times a year, but you eat three times a day.” In other words, food is a critical attraction and a way to activate projects and keep people coming back.

The final panelist was Kenneth Hubbard, a senior managing director with Hines in New York City. He described the evolution of food and beverage services in Hines developments around the world and made clear that there is no “one-size-fits-all solution” that will work in every project. What’s more, managing restaurants and food services can be risky, especially considering that about 50 percent of all restaurants go out of business within a year of opening.

Following the panel presentations there was a lively dialogue with the audience. Below are a few of the memorable takeaways:

  • What we eat and drink affects our health and well-being.
  • Agriculture and food are not just about eating. They also play an important role in fostering social interaction and a sense of community. Put another way, food has a unique ability to foster the creation of places in which people want to spend time.
  • The average piece of fresh fruit or produce currently travels about 1,500 miles (2,400 km) before reaching the consumer and the typical frozen meal contains ingredients from five countries.
  • Food waste is a big problem with significant environmental implications. In the United States, about 40 percent of all food is wasted, including 19 percent of food that reaches your home.
  • There is increased interest in and consumer demand for locally grown food.
  • Food halls generate enormous amounts of foot traffic, which benefits other real estate users and investors.
  • Local restaurants require a higher degree of risk tolerance, but are worth the risk, if they are carefully curated because they provide a measure of authenticity and uniqueness that many chain restaurants do not.

Farmers and real estate developers may seem like an odd couple, but this session made it clear that farm-centric development and food-focused projects are growing in new and unexpected ways. Urban agriculture is clearly more than a way to grow food; it is also a way to grow profits and build community.

Ed McMahon holds the Charles E. Fraser Chair on Sustainable Development at the Urban Land Institute in Washington, D.C.