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9. 5. 2023

After Dark Stores come Cloud Kitchens, less attractive locations and spaces in big cities

Unlike some Western European cities, which are taking a regulatory or temporary ban on the Dark Stores concept, this phenomenon is booming in Prague. According to experts from Colliers, together with the newly emerging Cloud Kitchen concept, the real estate agency has the potential to fill even less attractive spaces that have remained unrented for a long time. 

Dark Stores, or dark shops, function as smaller, in-between stores for online retailers and are designed for quick delivery of goods in the nearby area. They allow e-shop operators to guarantee delivery of goods in a particular neighbourhood within 15 minutes of ordering, giving them a major competitive advantage. For the real estate market, this trend affords agencies the opportunity to lease spaces that are less attractive and therefore have remained vacant for a long time. Dark Stores do not need to be visible to passers-by and attract customers, they just need good transport connections (especially with regards to delivery couriers) as well as constant restocking, which usually takes place on a daily basis. "While the ideal location for Dark Stores is in the middle of a densely populated area, the premises can be located in more remote streets, often in inner-city areas. This usually involves the cheapest parts of the area. In Prague, rental rates for this type of space are currently below EUR 10 per m² per month, which is on average 60% less than in better locations," explains Marjan Gigov of Colliers, adding: "The Dark Stores trend may gradually change the face of cities or certain areas. There are more and more of these operators, and they are usually trying to build a dense network of branches. Therefore, we can expect that the real estate market will see a growing interest in this type of space usage: not only in Prague, but also in other major Czech cities."

In addition to the warehouse and the kitchen

In addition to the Dark Stores concept itself, a related trend called Cloud Kitchen (also Virtual or Ghost Kitchen) has been growing in our country recently. These are prep rooms for online-ordered meals that are then delivered to customers via a delivery service - a third-party delivery platform such as Uber Eats, Wolt or Bolt. They can also be used by catering companies to prepare their orders. As with Dark Stores, Cloud Kitchen premises are not designed to serve customers directly. Thus, they can be located in more remote parts of town. However, good transport connections and fast and flexible distribution are important. "In addition to ordinary customers, restaurants or hotels are also starting to use cloud kitchen services, which help them get the most from their expensive premises in busy, attractive locations for their guests. Similar to Dark Stores, a Cloud Kitchen usually makes do with spaces ranging from 300 to 500 m2," explains Marjan Gigov, adding that the first Cloud Kitchen in Prague is MyFoodPlace, which is already used by a number of established restaurants to prepare meals for delivery or catering events. "The Cloud Kitchen concept has a future, so we expect it to expand throughout Prague," Gigov adds.

Critical voices are being heard around the world

While both concepts are experiencing a boom here, they have not received only positively reviews around the world. For example, critics of Dark Stores are concerned that although the outlets resemble traditional retail stores, they do not physically sell goods at all. Not only does this affect the traditional look of cities and structure of lifestyles, but critics say it threatens to drive brick-and-mortar stores out of business. Residents in the vicinity may in turn be bothered by increased traffic congestion and the associated noise and air pollution. Thus, some cities have attempted to restrict or even ban Dark Stores, unless they offer actual sales with access for passing customers. Paris, for example, defines Dark Stores not as shops but as warehouses or industrial properties, which allows them to be zoned separately. Amsterdam, for its part, is trying to restrict the creation of new Dark Stores and Barcelona has even pushed for a complete ban on them. "In the Czech Republic, these establishments tend to be built around office parks, where they do not burden residents as much. That is why the concept is not criticised in our country as it is in the other aforementioned European cities, where very small establishments often operate in the middle of residential districts," concludes Marjan Gigov.