The way people shop and the places they do so is changing rapidly these days. Online shopping has made “hanging out at the mall” a thing of the past and has us addicted to our screens at home instead. This is both a challenge and an opportunity for the retail real estate investor or tenant. Retail spaces, such as malls, department stores, and grocery stores are adapting, as retail space is being used in new ways, by new tenants. 

Here are just some of the major changes occurring in retail real estate:

Shopping Habits Change

Indoor and outdoor mall-type spaces are changing, and physical (brick-and-mortar) retail stores often serve as showrooms, try-on, and try-out areas, return areas, or pickup zones for items ordered online. Grocery shipping online is becoming almost as popular as clothing or electronics shopping on the web, and larger grocery stores may be shrinking soon. 

Mixed-Use Becomes Attractive

Shopping centers and retail developments are being converted into mixed-use areas that can include living spaces, entertainment, and commercial office spaces. Malls are evolving to include grocery stores, workout gyms and movie cineplexes. Visitors can now live, shop, consume entertainment and work (in a campus-like setting for a single company–or in co-working spaces where entrepreneurs rent desks), all together in adjacent, multi-use areas.  

Alternative Tenants Move-In

Malls or big-box retail space is morphing into space that includes personal care services, like health clinics, and day spas (for massages, waxing or facials), hair salons, marijuana dispensaries, car dealers (or test-drive stores) and more. Wherever you are, you’ll likely find a microbrewery next door. 

Less Parking Needed 

Rideshare services like Uber, plus the encouragement to bike, walk and take public transit more often, are changing/lessening the need for parking around former box retailers and malls. Pickup and drop-off spaces are more needed, currently. (However, self-driving cars are coming on the scene, so eliminating too many parking spaces could backfire.)

Short Lease Terms Help Create Community Excitement 

Popup shops are becoming more prevalent, whether as holiday-themed stores or branded marketing campaigns for new product releases. The newness of these, combined with community curiosity, can create new excitement and foot traffic at the new mall/entertainment/work/live spaces.

The best lenders are aware of retail changes and willing to lend in the changing environment. Being flexible and adapting to market demands is the best strategy for lenders and for new businesses alike.  

When you’re seeking funds to rent a retail space or invest in developing one, contact Commercial Capital Funding for retail real estate financing options.