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Could “ghost kitchens” be a boon for real estate development?

| Nov 3, 2020 | Development |

Many aspects of everyday life remain in flux here in California just as it is elsewhere. One area where significant changes are happening — and necessary — is in the restaurant business. Since the beginning of the events leading to all these changes, restaurants have taken substantial hits. In response, so-called “ghost kitchens” are taking off, and it could be a boon for real estate development.

Ghost kitchens are places where food is prepared for delivery services. No customers come to the location for meals. They exist solely for the purpose of food delivery services such as Door Dash and Grub Hub, among others. In some cases, the “restaurants” do not exist anywhere but in these kitchens.

Restaurant owners who can no longer afford their rent and who cannot operate any longer as a brick and mortar location could take advantage of this new business model. They can share kitchen space and equipment with others, which would save on costs. Other cost savings come from reduced overhead that goes along with owning a dine-in location.

Real estate developers could build locations for these kitchens to operate out of. In the alternative, property owners who can no longer market their spaces as originally intended could renovate locations for the same reason. Even if life goes back to what used to be considered normal, certain changes will not go away, and this could be one of them.

When looking for new real estate development opportunities, property owners, investors and developers may need to think even further outside the box than they have in the past. Ghost kitchens could fit that bill. Of course, there will still be contracts to negotiate, tenants to find and other issues common to other projects that will require attention and resolution. Working with an experienced California attorney could help increase the chances of a successful venture.