Five Trends Shaping National Retail Real Estate 

America’s retail real estate market is experiencing dramatic shifts. From significant technological innovations to shifting consumer patterns, it’s vital to keep up with retail’s evolution to meet rapidly changing expectations and demands.

Read below about five trends significantly impacting retail real estate nationwide.

1. Record vacancy lows 

The vacancy rate of national retail spaces sits at a record low of 4.1%, resulting in rising rents and competition for high-quality spaces. Multiple factors continue driving this trend:

Constraints on new construction, including higher construction costs

• Developers prioritizing alternative projects they view as more lucrative, such as medical offices and mixed-use developments
• Population growth outpacing the rise of new retail businesses

This translates to more retail businesses adapting to existing options on the marketplace, including expanding or minimizing operations to fit within available properties.

2.       Immersive shopping spaces

Many brands are redefining the shopping experience, expanding far beyond the traditional paradigm of straightforward transactions. A swell of experiential retail sees physical stores transforming to engage and entertain customers with interactive experiences, forging a deeper connection with shoppers to earn their loyalty. 

This can include redesigning a retail space to immerse customers in a brand-driven environment. Some offer interactive displays or virtual reality showrooms, while others incorporate sound and scents to trigger an emotional response. 

Casper mattress stores in Las Vegas and Los Angeles, for example, offer Nap Appointments where customers can personally test the products in private, quiet environments, transforming mattress hunting from tedious to relaxing. An IKEA location in Dallas incorporated virtual reality headsets to allow customers to explore virtual, high-definition home environments where they can test out different design combinations instantly.

These reimagined retail spaces keep foot traffic flowing to brick-and-mortar stores—at least those offering a memorable experience.

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3.           Adaptive reuse

Many big-box stores and shopping malls are shuttering, as consumers prefer shopping for common products from the comfort of their keyboards. Developers are breathing new life into these structures, however, by repurposing them for a different use.

Diversified Partners currently plays a central role with a large-scale example of this trend. The firm is leading the retail component of The Metropolitan, an $850 million, 68-acre redevelopment of Phoenix’s former Metrocenter Mall. 

One of the largest mall transformations in Arizona history, the property will be redeveloped as a mixed-use community with more than 1,100 townhomes, 400 apartments and 100,000 square feet of retail, dining and entertainment.

The Metropolitan project delivers a number of advantages, including:

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• Revitalizing the Metropolitan Mall property with new resources to improve residents’ quality of life, including a curated mix of restaurants and family-friendly experiences
• Savings on construction costs, with the retrofit project involving significantly lower costs than new construction
• A reduced carbon footprint, as reusing a building’s core structure consumes far fewer materials and energy than demolishing a structure and building a new one

Many communities can look forward to seeing darkened stores transformed for a new, functional purpose. 

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4.              AI-Powered site selection

Data crunching and property assessments for retail site scouting once took weeks—now it takes minutes, as retailers are tapping AI to help pinpoint optimal locations. With the integration of AI’s rapid aggregation, business owners can analyze foot-traffic, sales forecasts, risk assessments, social patterns and even weather that could impact their business’ success at specific locations.

This supplies a variety of benefits for site selection and expansion decisions, including helping weigh the daunting number of factors involved with making strategic and effective location decisions. It also delivers accuracy by drawing from dynamic date sources, offering the most up-to-date information. 

The Diversified Partners team embraces incorporating AI technology to support the firm’s efforts at every level, from market analysis to administrative tasks and beyond. 

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5.             Prioritizing necessity-based retail

E-commerce might dominate many shopping spheres, but some retail experiences still require leaving home. Aiming for stable cash flow, retail tenants are honing on essential, recession-resilient businesses that can’t be replaced by e-commerce.

These include:

• Grocery outlets
• Hair salons
• Pet services
• Auto repair
• Pharmacies

By providing immediate, non-digitizable services that often involve repeat visits, these retail properties promise high, consistent traffic and guaranteed protection from online competition.

Ongoing changes

These burgeoning retail trends deliver cutting-edge solutions today that will serve the discerning consumers of tomorrow, with innovative strategies tailored for an increasingly technologically driven real estate market.

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