Weekend Interview: CBRE Retail Ace Amy Fingerhut On Why Rents Have Become 'Unsustainable'

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For Atlantans who dined at renowned Fox Bros. BBQ, True Food Kitchen or Farmburger, or shopped at Lululemon or Patagonia, chances are they did so because of Amy Fingerhut. 

Fingerhut, a senior vice president at CBRE in Metro Atlanta, is one of the city’s most prolific retail brokers. And while it has been a great time to be a local retail landlord, with rising rents and low vacancy, Fingerhut says it has become a challenging environment for restaurateurs.

Before the pandemic, roughly 20% of shopping center space was leased to food and beverage space in the region, she said in an interview. Now that number is closer to 50%. 

“We are already seeing cracks, since the market doesn’t support all of them," Fingerhut said of the restaurant boom.

Real estate brokerage wasn’t what she envisioned for herself. Since the age of 14, Fingerhut said she worked in restaurants and planned to open her own after graduating with a restaurant and hospitality management degree from the University of Georgia in 1995.

But the realities of being a restaurateur — long hours and little money — pushed her to the real estate side after a stint as a tax consultant with Deloitte. 

“I love, love, love what I do,” Fingerhut told Bisnow. “To me, my career is not like work. I want to get up every day and do it. So I want to do it until I can't do it anymore, which means hopefully for the rest of my time.”

This interview has been edited for length and clarity.

Bisnow: Give us the Amy Fingerhut 101. What path led you to become a retail and restaurant leasing royalty in Atlanta?

Fingerhut: I did not take a normal path. I kind of grew up working in restaurants. I never really knew that brokerage was something that would be where I belonged. I was very involved with CREW [when I was at Deloitte]. I would go to these luncheons and I would see these women that were the height of what I aspired to do and to be. I was like, wow, this is amazing. 

I feel like I found my highest and best use for my skills, which ties it right into real estate. That was what worked for me, and I felt like I could do this my whole life. But come on, in the '80s, in the early '90s, this wasn't something women really were actively going into. It wasn't really a college degree at the time. So I had a very different path, but I think I was always meant to be here. 

Bisnow: Did you ever expect in your career to see Atlanta retail rents rise to the level where they are now? 

Fingerhut: In my opinion, retail rents across the United States are actually at unsustainable levels. I think Atlanta, while we are top 10 cities based on population and growth, we are not the same as a New York, LA, Chicago or Miami. And it's not because we aren't absolutely fantastic as a city, but we don't carry the level of tourism that those cities do. We don't have those new visitors coming every day to our city. 

When you look at the retail rent growth and then the continued growth every year where you sign a lease and the rents increase based on quote-unquote inflation or [consumer price index], etc., we don't have the ability to necessarily keep up with that. I never thought that we would be at the level that we're at. And I, unfortunately, think that they're unsustainable and I think that rents are going to have to settle in, potentially either have very low growth or no growth over the next several years to keep the industry healthy. 

Bisnow: What fundamentally changed about the retail landscape in Atlanta since you started your career?

Fingerhut: Tremendous growth in population, and a lot of digital brands finding a home in Atlanta over other cities on the East Coast based on the average age in Atlanta being young. I mean, Atlanta's average age is 35. It's one of the youngest cities in the United States. You see brands that are very enamored by that, and they've done well digitally, which means they want to plant a flag here. 

We have retail brands that are putting Atlanta potentially first in their U.S. expansion or at least in the top eight cities that they're looking in. We were not seeing that 10 years ago at all. Also, the Sun Belt as a whole has changed, and we have great weather, which means we already have great patios, things that helped restaurant expansion. So I think those factors have really helped Atlanta change and grow and be a different place today than it was 15, 20 years ago. 

I have watched the city grow up in the last decade, and it is incredible to see that we've become so much more of a community and a walkable city where people want to live, work, play and be a part of everything going on in one area. 

It used to be when everyone would come [to Atlanta], and Buckhead, Buckhead, Buckhead was all you would hear. It is not a knock on Buckhead, but if you did an average survey of 100 22 to 25-year-olds that are moving to Atlanta, they all want to live on the Atlanta BeltLine. They want to live in the city. It has changed dramatically, and I think that is adding to the retail landscape as well. 

Bisnow: For restaurateurs, how sustainable are today's retail rents? And how are they addressing rent with landlords when overall operating costs are going up? 

Fingerhut: The operators have got to maintain their costs in order to be successful. So while you have a fixed cost, which is occupancy cost and then you have, you know, non-fixed costs which are food and labor, you have to manage those things. 

I think that some of these restaurant rents are not sustainable. I think it has more to do with the fact that we used to have retail projects that would see 15%, maybe 20% at most be food and beverage. And now it's 50%. If you flood the market with too many seats that can’t be supported by the population, they all cannot survive. High rents are making this even tougher. 

Bisnow: What concerns do you have about the level of consumer debt today and how it could affect retail and restaurant spending in the coming year? 

Fingerhut: I know that debt is very high, but I also know that wages are higher than ever before, and I see people spending at levels that do feel uncomfortable. I still think people have to eat, and I still think people want entertainment. I think people will instead limit what they're doing. 

The consumer is changing. So the consumer that might have gone out for evening drinks and some food now goes to a workout class, meets their friends, they go out but they might not be drinking anymore. And so you see the alcohol pricing and the alcohol levels changing, which can affect restaurant sales significantly. 

Unfortunately, we don't know enough about Gen Z spending. It's so all over the board. They like to spend, they like to be out. They like to have these memberships everywhere. You look at my generation, Gen X, that no one seems to care about, but Gen X is still spending. They might be looking like they're spending less because there are less people, but they're the ones that are less in debt, most likely, and they have kids and they're going on trips and they're doing things. But they're spending differently and smartly. 

Bisnow: You said that the consumer has changed this past decade. Tell me a little bit about how you see consumers for restaurants and retail change and how will the next generation influence retail.

Fingerhut: I work with several Gen Z-ers, and I also work with millennials and then there's me, the Gen X. I see the difference in the generations. It is very evident. 

A lot of the millennial population now has gotten married, maybe started to have a family, and so they might have moved to the suburbs. So they look a little bit different than the younger millennials. Gen Z overall, they tend to spend a lot of money. When you and I were in our twenties, the thought of belonging to workout places that were $200 a month? We didn't do these things. They want to take all their money and they want to live with everything. 'I'm going to get my nails done and I'm going to get Botox and I'm going to do all these things.' We didn't go and do 18,000 things to our person. We were healthy and we exercised. 

I don't understand necessarily the entire Gen Z consumer, and I don't know if any of us do yet because a lot of Gen Z is very young.

Bisnow: Available rent retail space in Atlanta is sparse. With the recent Fed rate cut, do you expect to see more developers being able to dust off plans to add more retail space in Atlanta? 

Fingerhut: I did have some of these conversations this week. We are actually seeing some loosening in lending, and that would help a lot in construction. 

The challenge is still the cost of land and the cost of construction. It's putting us in a place where rents are unsustainable. Even if you are signing the deals, we don't even know if it's going to be sustainable when that retailer opens in the market with those rents. There's still a lot of caution, I believe that costs have to come down, and I don't know that we're going to see the costs come down for a little bit longer.

A lot of people will tell you they're waiting until ‘after the election.’ I personally do not understand what that has to do with things, because they said it four years ago and we moved right along. I just think there's caution based on where consumer spending is going to be and what the holidays look like before we see [developers] break ground.

Bisnow: What concerns do you have about the Atlanta restaurant industry? Are there players or establishments you see going away in the future? And would you characterize the current state as a bubble? 

Fingerhut: I don't want to characterize it as a bubble. I'm a big traveler, and Atlanta is one of the best restaurant cities in the United States, hands down. I mean, I'm not comparing it to New York or even Chicago or maybe even LA. But when we go to a lot of other cities in the country, we tend to say, ‘Wow, Atlanta still does a phenomenal job.’ We have an incredible local scene, I think one of the best local restaurant scenes you can have, where there is so much community. 

I do believe that we've seen several operators expand too quickly in our city in the metro area. That could be a problem going forward because we still have considerable staffing issues. 

Because we have rents that rose so much in the last three years, and we have costs that have risen, if we don't have smart operators we could see a lot of closures. 

We've got to actually work with our clients as a whole so that we don't have these closures so that we can be smart about how we continue development in our city. 

Bisnow: You've been vocal in the past about the role women play in commercial real estate. How do you feel things have changed since the pandemic about CRE and the role women have in it? What does the industry still need to do to improve? 

Fingerhut: In retail real estate, women have had a great voice. We continue to rise. In Atlanta, it's always been a lot of a, there's no other way to say it, but it's a good ol' boys' world. I think it's up to us to be strong and confident, and I do believe that women will continue to grow in commercial real estate. 

The office community seems to have amazing growth with women in commercial real estate and industrial. We have someone in our office who is an amazing woman in industrial real estate. So I do believe that things are changing. And I just hope it continues in that direction.  

Bisnow: How has your history of working in restaurants during college and in your early 20s influenced how you do your job today?

Fingerhut: I worked in restaurants from the week I turned 14 years old throughout the time that I was almost 27. It was very fun to take a part of me and be able to utilize it in my business today. The beauty of working in brokerage with restaurants now is the ability to understand the [profit and loss]. The ability to understand food cost and labor cost and what goes into that P and L. That's why it helps me help restaurants with how they can be successful. 

I love, love, love what I do. To me, my career is not like work. I want to get up every day and do it. I want to do it until I can't do it anymore, which means hopefully for the rest of my time.

Bisnow: As a foodie, what is the most daring dish you've ever tried and how was it? 

Fingerhut: We've traveled all over different places in the world and tried different things. I think what I was most nervous to try was some insect dishes that we ate a couple of years ago in Argentina — crickets. And it was actually really good and really unique, and you just have to kind of think about how you're eating something that's no longer crawling or living. I mean, I try to eat the delicacies in every country, but they're not that outrageous. Like, eating kangaroo in Australia is pretty much the norm, and we did several times. 

Bisnow: If you're looking for a sublime experience, where would you go? What would you be doing? 

Fingerhut: It's really tough. As driven by food as I am — all of our trips we plan are around food, I look at so many different food experiences as just a part of the country — what I love is going to a place, and if they're known for something specific, like trying five different places with that item in one day and actually figuring out which one is the best or which one you compare to the other.

It's hard to say that there's one specific sublime experience. There just isn't. 

We do a lot of progressive dinners on trips where we might start at one restaurant and go to another restaurant and go to a third restaurant. That, to me, is one of my favorite things to do because you get all kinds of restaurant experiences in one night and you get different food and different people. 

It's about not just the food, but it's about the company and the experience within the four walls, and how you go about it and where you are. 

Bisnow: So your working careers range from waitressing to consulting at Deloitte to now being a top retail broker. Is there an act four in your future? Would that involve maybe even operating your own restaurant? 

Fingerhut: Absolutely not. I thought I would open my own restaurant when I was in my twenties. That's what I aspired to do. And I realized that when I worked basically 80 hours a week at it, making a lot less money, it was the toughest business to be in. 

Bisnow: What's your weekend routine or favorite weekend activity? 

Fingerhut: My weekend routine always involves a long run on the BeltLine and through the in-town neighborhoods. It's probably my favorite thing just because it's something that's so much a part of my life. And again, like I said earlier, I love to see how the city has grown up and how active it is. 

My others would be, really, dinners with friends at all of those sexy Atlanta restaurants, and I like to entertain as well. I just created my dream kitchen in my home, and I like to have people here and I love to cook. 

Bisnow: Alright, give us a bold prediction for the rest of the year.

Fingerhut: I wish I had a crystal ball. I wish I could say something crazy that's going to happen. I feel like nothing major is going to happen because of the fact that we're in this election period. Until we get through that, it's going to be kind of quiet. 

I do think we're going to start to see a pretty concerning amount of space come back to the market based on how the holidays go. If people are really spending less now, it's concerning to see the space come back. But it's also a positive because there's such a need for retail and restaurant space in the city. Even in the suburbs, we're seeing just no availability in a lot of places. 

The swath of vacancy that we thought we would experience in 2021, I think is actually going to occur in 2025.