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Bricks-and-Mortar Retail Heats Up

The commercial real estate market showed a lot of movement at the end of June, as retail players gobbled up available space.

According to the retail newsletter Retail Brew, despite major retail closures in 2020, retail real estate gaps are closing rapidly in 2021, with the real estate acquisition trend expected to continue into autumn 2021. In some places like Chicago and Boston, the gap is already closed.

City

Q1 2020

Q1 2021

Chicago

12%

11%

Dallas

9%

11%

New York

8%

10%

Austin

7%

8%

Boston

8%

8%

Washington DC

7%

8%

Los Angeles

7%

8%

San Francisco

5%

7%


Enthusiasm for physical retail performance is high. A Retail Brew/Harris poll in March indicated that 43% of consumers expected to do most of their shopping in-store post-pandemic, compared to only 24% of respondents who said that online shopping would be their primary mode.

What’s most interesting is that retail establishments that doubled down on ecommerce sales and online prospecting reported that their digital adventures only strengthened their physical retail operations. The days of physical versus virtual are apparently over - the exponential value of hybrid retail appears to be here to stay.

More than 3,300 stores are expected to be opened this year, according to Coresight Research. But don’t expect those stores to be the same old stores of the past. Retail landlords are looking for more diversified tenants, and that means favoring businesses that do more than stuff stores with inventory. Retailers that have a vision and practical application for delivering experiences stores are getting preferential treatment.

Even if you’re perfectly happy with the retail space you’re in, this information is valuable. A more experiential, digitally-attuned competitor could be moving in, right next door, or down the street. How much they appeal to your customers will have a material affect on your business.