5 October Why Strip Malls are Succeeding after COVID October 5, 2022 By sma Commercial Real Estate News, Property Investment commercial real estate tenants, real estate trends, restaurant, retail space 0 WHY STRIP MALLS ARE SUCCEEDING AFTER COVID October 5, 2022 | CRE News, Investment | commercial real estate tenants, real estate trends, retail space, restaurant From coast to coast, the latest shopping fixation might come as a surprise. That’s right, strip malls are here to stay! As the economy has had its fair share of speed bumps (and continued hardships are projected to be on their way), strip malls have been a consistent performer in the world of commercial real estate. Of particular note, their performance has been impressive regardless of geographic region. So long as there is a populace residential area in the vicinity, strip malls have become a reliable staple trusted to meet the basic supply needs of consumers. Versatility The draw of strip malls in commercial real estate has always been their versatility (and some people have even made it their personal moniker). With these adaptable properties, larger locations can be renovated to fit the needs of multiple tenants that do not require much space. As the market changes, the inherent modularity of these locations affords property owners the room to adjust to market trends. A careful selection of tenants is key when looking to manage a successful strip mall location. The location and clientele should always drive the decisions when selecting quality core tenants, of course. However, as a quick tip, incorporating a fast-casual restaurant for evening traffic and a coffee shop for morning traffic means that the property as a whole should receive attention throughout the day. Industry insiders still recommend focusing on tenants that offer in-person services such as nail salons, barber shops, or things like chiropractic services, since these cannot be replaced or replicated in the e-commerce realm. Additionally, the power of an in-person presence in the world of retail still is considerable enough to warrant space in-store, even from brands that are leaning towards exclusive online service. Some brands may help attract a tenant that is considering their options, while others might dissuade strong tenants that drive business. Proper management and consideration is key to finding success with a strip mall, but the right balance can pay dividends. The flexibility that strip malls afford may even be expanding. According to industry analysts at Bloomberg, some architects and urban designers have suggested defunct strip malls could be the answer to rising housing shortages. Although these conditions are affecting some areas of the U.S. more than others, this projection is another account commending the view of strip malls as consistent problem-solvers. In Vogue Yes, e-commerce has taken a massive step forward through the global pandemic, but strip malls have endured where many traditional retail venues have floundered. The accessibility and convenience of strip malls during a time when larger indoor facilities were avoided has made this investment a timely one, and while malls may be making a comeback as a whole, the successes of strip malls may have made them the new fashionable hotspot under a new name. Lifestyle Centers, or simply Life Centers, are the modern evolution of the public square, or the more recent strip mall. Marketed towards a higher income demographic, these fashionable outlets generally prioritize diversity in selection, reminiscent of traditional enclosed mall spaces. However, the open-air layout creates a setting shoppers are more comfortable with exploring, potentially as a hold-over from pandemic habits. The success that these centers have been seeing has led to property owners targeting more upscale tenants and reconsidering the design of their outdoor spaces. Whether this fad continues at its current rate or not, strip malls have proven themselves to be a consistent performer in the commercial real estate market. Analysts are continuing to monitor these trends and focus on which investments project to be the most stable in the next year, especially considering the global recession that still appears to be on the horizon. Now more than ever, commercial real estate investors should take special care in making their next purchase. Although strip malls have been performing well, and are projected to continue to do so, there are some pitfalls to avoid before developers move into this realm. Outside of installing tenants that are not complementary to one another or investing into a property with a poor location, one common mistake developers make is building up. A second floor is far cheaper than dealing with foundations, but this does not lead to doubling tenants as some might think. Even at cheaper rates, few high value renters will risk the lower foot traffic on a second floor, and converting for office spaces leads to parking issues and another slew of issues to manage. There are exceptions, naturally, but for the most part, stay low and focus on finding those anchor tenants. Strip malls are an interesting investment in the current market and have been solid, consistent performers. With economic trials likely ahead, we will continue to monitor how the ever-dynamic commercial real estate market adjusts. As always, keep up with the Commercial Inspector for the best tips and the latest trends in commercial real estate! Comments are closed.