Why Second-Generation Retail and Restaurant Space Is Heating Up in St. Louis

BLOG // August 2025

Why Second-Generation Retail & Restaurant Space Is Heating Up in St. Louis

By Corbin Cox, Associate, NAI DESCO

As construction costs climb and labor shortages slow new development, more restaurant and retail operators are turning to second-generation space — properties that were previously occupied by similar businesses. Why? It’s a smart strategy to save money and open faster.

This is part of a much bigger national trend. According to CRE Daily, restaurants now account for 40% of all new retail leases across the U.S. That level of demand is fueling intense competition for existing sites with the right infrastructure already in place — especially second-gen restaurant spaces with kitchen hookups, hood systems, and drive-thrus ready to go.

Here in the St. Louis region, we’re seeing that trend play out in real time.

Cost savings. Retrofitting an existing restaurant can cost significantly less than building from the ground up — particularly if the property already includes a grease trap or commercial-grade hood system.
Speed to market. Getting open sooner means generating revenue faster, and that can be a game-changer in today’s competitive environment.
For example, a restaurant trying to convert a traditional retail space would often need to install expensive new systems just to meet code — a process that can drag on for months. But with a second-gen site, much of that infrastructure is already in place.

Hot Submarkets: Spotlight on Glen Carbon
One property my team is working on — a former Dairy Queen in Glen Carbon — is getting strong attention from prospective tenants. Glen Carbon is one of the most active trade areas in the St. Louis MSA, and this site’s visibility and access make it especially appealing.

Interestingly, the reasons are split:

• Half of the potential tenants want to reuse the building, saving on time and construction.
• The other half want to tear it down and rebuild, simply because the location is that good.

We’ve also had restaurant clients come to us specifically asking for second-gen space with existing hood systems, recognizing how much time and money that can save on the front end.

What Landlords Are Thinking
From the landlord’s perspective, the credit of the tenant still drives many decisions. National tenants with strong credit are more likely to receive TI dollars or lease incentives, since they’re seen as lower risk over the lease term.

But not all landlords are playing by the same rules.

Institutional owners often hold out for credit-worthy tenants.
Local owners, on the other hand, might be more open to working with smaller operators — especially if they’re willing to take the space largely as-is and don’t require significant improvements.

Second-Gen in Action: A Real-World Win
A recent deal that stands out was in Alton, IL, where Pete and I represented the landlord on a lease for a former Office Depot. The tenant, Savers, is a multi-billion-dollar publicly traded company, and the landlord is a large investment group based in California.

This was a true win-win:
✅ High-visibility freestanding location
✅ Strong national tenant
✅ No need for a lengthy redevelopment
It’s a perfect example of how second-gen space can align landlord and tenant interests when the fundamentals are right.

Advice for Tenants Considering Second-Gen Space
Second-gen space can offer great value, but it’s not a guaranteed shortcut. You still need to think strategically — especially about location and competition.

Take fast-growing chains like Raising Cane’s and Chick-fil-A. They’re constantly jockeying for the best corner, closest to traffic, and most visible to passersby. Even with great infrastructure, a site won’t succeed if it’s on the wrong side of the road — or too far off the beaten path.

Bottom line:
✅ Be strategic.
✅ Prioritize access and visibility.
✅ Look for infrastructure that speeds your launch — without sacrificing long-term potential.

Want to explore available second-gen space in your target trade area?
Reach out to our retail team at NAI DESCO — we’re happy to help you find the right fit.

Meet Corbin Cox
Corbin is part of NAI DESCO’s retail brokerage team, helping clients find the right spaces — whether they’re expanding their restaurant concept or rethinking a retail footprint. He knows the St. Louis market inside and out and brings a practical, people-first approach to every deal.

Want to talk second-gen strategy or tour available sites?
Email ccox@naidesco.com or give him a call at 314 624 7686