Food delivery services are becoming the latest disrupter in the retail sector and are shaping the way restaurant tenants select their next location.
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Just as food trucks bought mobile food to city office blocks to feed the workers, these delivery groups are competing, not only for customers, but for traditional retail space.
In Sydney, UberEats can be delivered to most of the east, CBD and inner west, with the plan to grow the UberEats reach nationally. Others in the same market include Deliveroo and Foodora.
According to retail leasing agents, the restauranteurs and food suppliers are looking at sites that may have a street frontage for services, but also a back area that will accommodate parking for delivery bikes and cars.
Joshua Bush, the project leasing executive, retail, at Colliers International said even smaller warehouses were being considered if they would hold a kitchen and an area for parking.
Under the scheme, which is taking the next step from the traditional pizza and restaurants' own home delivery, the delivery service provider takes a 30 per cent fee from the dollar price on the menu.
"For example, a $14 burger will not cost the consumer any extra to have it delivered as the restaurant is footing the bill of $4.20, the food vendor is able to rake in more cash by enjoying the huge market share that is on offer," Mr Bush said.
"The opportunity to capture sales from UberEats is at the forefront of our property requirements, if our restaurant does not sit within three kilometres of our target market, we will lose up to 50 per cent of our revenue" said Griff Pamment and Milan Strbac from Juicy Lucy Chicken in Surry Hills, who are now looking for a new restaurant location.
According to Mr Bush, this new trend affects the retail property market in more ways than one, as technology is changing the way restaurant tenants decide on leasing real estate.
"We are seeing a spike in food and beverage leasing activity in the city fringe and a number of new restaurant transactions have just been completed in Surry Hills, Waterloo, Kensington and the surrounding eastern suburbs," he said.
Miron Solomons, director, Sydney metro sales at Colliers International, said as the demand for investment property in the city fringe market remained stronger than ever, "innovations such as UberEats will further underpin existing and future values where available to businesses".
"For example, food and beverage-approved properties in Surry Hills are again now more attractive than perhaps in Enfield, Ashfield or Maroubra, as this is not an area that UberEats will deliver to at present.
"Ultimately, it is a way for restaurant businesses to diversify revenue streams, and make more money. This is better for landlords and investors as diversified revenue in business creates security and overall viability for their tenant's business," he said.
From a development perspective, City of Sydney Council requires a certain amount of retail for a mixed-use development. Where the cream is in the residential, most developers don't have a property strategy for the retail component of their development.
For example, a food tenant will need to have the correct services in place in order to want to lease, including grease trap, exhaust, gas, the correct tenancy layout and seating as well as power supply for these tenants to run their business.
UberEats in Sydney delivers within the suburbs surrounding Sydney, Abbotsford, Rose Bay, Tempe, Mascot and South Coogee.
