Restaurant Real Estate at a Crossroads: Signs of Recovery Emerge After Years of Disruption

Written by:

Steve Marcinuk

Date:

13 Feb 2026

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After several years of pandemic aftershocks, inflation, and changing consumer habits, the restaurant real estate sector is beginning to show early signs of recovery. While the industry has faced some of its most difficult challenges in decades, commercial real estate professionals specializing in restaurant site selection are cautiously optimistic that the market is stabilizing.

David Gabbai, Executive Vice President at Colliers, has witnessed these shifts firsthand. With 36 years in commercial real estate and deep experience in restaurant site selection, Gabbai’s career began by helping General Mills Restaurants (now Darden Restaurants) identify locations for Red Lobster and the then-newer concept Olive Garden. This national exposure gave him insight into how restaurant real estate operates under different regulations and market conditions.

“Commercial real estate works differently in every state,” Gabbai notes. “Having relationships across those markets allows me to represent clients more effectively and develop strategies that work in a range of environments.”

A Convergence of Economic Obstacles

The past 18 months have brought an unusual combination of pressures for restaurant operators and developers. What started as pandemic-related disruptions quickly became a set of economic challenges that upended the restaurant expansion model.

“The economic climate changed overnight three years ago,” Gabbai says. Pandemic-era government stimulus, while stabilizing the economy in the short term, contributed to a wave of inflation that pushed up costs across the board. As inflation spiked, the Federal Reserve raised interest rates, which in turn made development financing much more expensive”.

Florida, in particular, saw dramatic changes. The state’s open stance during the pandemic attracted a large influx of new residents seeking lower costs and fewer restrictions. This population boom strained infrastructure and created new hurdles for restaurant development.

“We got an influx of people moving to Florida, which caused a housing shortage and huge pressure on our infrastructure,” Gabbai explains.

The strain was evident in slower permitting, longer approval timelines, and rising impact fees—charges developers pay to support infrastructure improvements. In Central Florida, these fees often jumped from as low as $100,000 to as much as $500,000 per project, fundamentally changing the economics of new restaurant construction.

At the same time, supply chain disruptions led to sharp increases in construction material costs. Lumber yard shutdowns and international trade delays drove up prices, making it even harder for developers to keep projects on track.

“The result was a perfect storm of rising costs, delays, and new barriers,” Gabbai says. “It changed how business was done on the development side.”

Development Economics Hit a Wall

These overlapping challenges created a situation in which many restaurant projects could not proceed. Developers who once borrowed at 3.5% interest suddenly faced rates closer to 7%, while also contending with higher fees and construction costs.

Operators found themselves squeezed by rising labor, food, and utility costs, making it impossible to pay higher rents or development charges. “End users would say, ‘I understand your costs have gone up, but so have mine. I can only pay you X, but your minimum is Y, and those numbers don’t align,” Gabbai explains.

This gap between what developers needed to charge and what operators could afford led to a standstill. Many properties went undeveloped — not because of a lack of demand, but because the deals no longer worked financially for any party.

Changing Consumer Habits

While developers and operators struggled with construction costs, consumers were adjusting their own spending. After a period of stimulus checks and reduced expenses, many Americans found themselves with depleted savings and rising credit card debt, even as inflation continued to erode purchasing power.

“Consumers used government support to pay down debt or cover expenses, but now that’s gone. Incomes are flat, and something has to give,” Gabbai observes.

Technology has significantly shaped restaurant demand. The rise of streaming and food delivery platforms offered alternatives to traditional dining and entertainment. “People can now order in and watch a new release at home for less than the cost of a dinner out and movie tickets,” Gabbai says.

This trend hit full-service restaurants hardest, while quick-service chains proved more resilient. With their lower prices, drive-through convenience, and no tipping required, fast-food brands continued to perform well even as other segments struggled.

Strategic Responses

In this challenging environment, commercial real estate professionals have had to adapt. Gabbai’s approach relies on long-standing relationships and a deep understanding of market dynamics.

“I always go all out for my clients. I don’t chase fees — I focus on getting the deal done and making sure my clients get the best result,” he says.

Gabbai leads a six-person team and emphasizes mentorship and strategic thinking. “Younger team members often come to me with situations they haven’t seen before. I help them navigate those, bringing experience to the table.”

For Gabbai, success comes from understanding the motivations and personalities involved in every deal, not just the numbers. “My role is simple: I solve problems for my clients and my team.”

Early Signs of Recovery

Despite recent difficulties, Gabbai sees reasons for optimism as 2026 approaches. He points to geopolitical developments and economic policies that could support a sector rebound.

“I feel optimistic that the geopolitical climate is improving. We’re seeing some conflicts wind down, and our government is working to create a safer environment,” Gabbai says.

He expects economic policy changes to begin to have positive effects by the third quarter of 2026. “Once we get through the pain, I think we’ll see a recovery and a return of consumer confidence.”

Gabbai tracks several key indicators: consumer confidence, employment stability, and overall economic security. “When people feel secure in their jobs and the world feels safer, that will boost spending and help restaurant real estate recover.”

A New Economic Cycle

Gabbai believes the current environment does not fit the classic definition of a recession. “We’re in a recessionary period, but it’s not what it used to be—two quarters of negative GDP growth. The economy is more sophisticated now, and the old indicators don’t always apply.”

He argues that technology, globalization, and large-scale fiscal interventions have changed how economic cycles play out in real estate and beyond.

What’s Next

The future of restaurant real estate depends on several factors: stable interest rates, infrastructure improvements to keep pace with population growth, and a rebound in consumer confidence.

Veterans like Gabbai remain cautiously optimistic. The unsustainable economics that defined much of 2025 are beginning to ease, but the recovery is likely to be gradual.

“I recognize the pain we’ve gone through, but I’m hopeful about the future for both our country and our industry,” Gabbai says. “I haven’t been this excited about the direction of the market in a long time.”

The performance of restaurant real estate will be a key indicator for broader commercial real estate trends, especially in fast-growing states like Florida. As the sector navigates this transitional period, relationship-driven service and deep local expertise will be critical for those seeking to succeed in the next phase of the market.