We reached out to a variety of industry experts in the retail real estate sector across the country to provide their perspective on what they expect for the retail real estate market heading in 2021.
The good news is that despite the doldrums produced by the ongoing pandemic, retail real estate experts are feeling confident about the future of the market, and the changes that are coming along with it. A few common themes provided by the experts’ insights below are: innovation, customer experience, and a greater movement to support local businesses.
Here is what real estate experts say on Retail Trends for 2021:
Florida is the beneficiary of the failed policies in NY and NJ which are driving over 1,000 people PER DAY to move to Florida! All of those new residents have to eat, shop furnish their new houses, etc. So while we certainly have seen some fallout in the retail industry, the vacant spaces are being re-leased almost as fast as they become available.
Restaurants have been hardest hit, but because of the costly infrastructure left behind… these vacated spaces offer new opportunities at a low entry point for new restauranteurs and concepts. (Many coming out of the northeast.)
Restaurants have changed the way they do business with takeout, delivery and outdoor seating and I think these changes are here to stay.
I’m most excited to see what new concepts take advantage of these opportunities.“
Russell Bornstein, Senior Director- Retail Services, Colliers International
The trend I’m most excited about for 2021 is the response to pent up demand in spending from the consumer and the growing mission to support small businesses!
I think 2021 will be The Year of the Small Business!
National retailers still have travel bans to deal with and therefore won’t be able to sign as many leases as usual. Therefore landlords will pivot to the small business to add to the tenant mix of their shopping centers.
I also see a trend of regional mall tenants moving outside to open air centers. This is all great news for neighborhood and community shopping centers!”
Beth Azor, President, Azor Advisory Services
Without question, 2020 presented a unique set of challenges to the retail industry that have forced all aspects of the sector to re-evaluate how business will be done in the short and long terms. Heading into 2020, a large portion of the shopping center industry was focused on creating an experience for the consumer in order to differentiate and compete with the e-commerce option.
The experiential focused tenancy was the hardest hit segment during the pandemic and in certain cases will not recover.
I am a firm believer the consumer is starving for interactive experience, now more than ever, but what will that look like post-pandemic and how do shopping center owners and retailers evolve their business models to adapt to this shift.”
Danny Finkle, Senior Managing Director, JLL
I’m most excited about the amplified growth in new, locally run businesses. Covid has obviously had a devastating impact on nation’s employment levels but the American entrepreneurial spirit is alive and well. There is a significant wave of new business creation and franchise purchases happening due to people needing to create jobs for themselves.
This is spurring demand for retail space, innovation in retail, and fresh offerings. In addition, they are creating new ways of operating retail safely since they are starting off in this environment.
Finally, consumers are more interested in shopping local and supporting the business in their neighborhoods which will be good for the entire industry.”
Brenna Wadleigh, CEO, N3 Real Estate
2021 will be an amazing year for innovation. Change and adaptation is no longer a luxury for retail. It’s a requirement to stay alive.
Restaurants will continue to push ghost kitchens and quicker pickup and delivery options.
Drug stores will explore expanded healthcare services.
Mass merchandisers will focus on brand partnerships and pop up stores to keep the consumer engaged.
Convenience chains, like 7-Eleven, will continue their expansion as consumers demand faster and faster access to goods.
All retailers will be focused on technology improvements to streamline their inventory, predict consumer preferences, and manage returns. However sweeping technology initiatives are difficult to implement on an individual company level quickly, so increased merger and acquisition activity is expected.”
Karly Iacono, First Vice-President Investments, Marcus & Millichap
I’m excited at the prospect of returning to a more normalized state of affairs post-pandemic.
I believe the headwinds of 2020 will ease in the first two quarters of 2021, which will result in more patrons for retail, service, and restaurant businesses and spur the leasing deal flow that has been on hold for much of this year.”
Matt Kaushal, Executive VP of Real Estate, Tutera CRE & Development
Going into 2021 I am most excited about the repositioning of functionally obsolete shopping centers or portions of shopping centers. Covid-19 has accelerated the decline of troubled retailers and as a result, the properties they occupy, which is creating significant opportunities for repurposing the land they exist on for alternate uses.
These changes will breathe new life into their respective communities and make for great opportunities for those who can capitalize on them.”
Marcos Puente, Principal, MMG Equity Partners