The pandemic just quickened the timeline for the adaptations that were already taking place in retail. One of these changes being retailers taking advantage of the much more flexible lease terms offered by desperate leasing agents. With adaptations in commercial real estate, we are entering a new phase in retail.
Retailers are opening more stores than they are closing. For malls that have struggled filling vacancies, this news is triumphant, but it comes with a catch. The reason retailers are so ready to open more doors is because they are feeding off the desperation of leasing agents eager to bring retailers to their empty spaces. Lease agreements have become more flexible in their terms, often offering shorter lease lengths and cheaper rent. It would appear that in this case, the retailers have the upper hand. However, it should really be seen as an overall industry adjustment for commercial real estate. Shorter and more flexible lease terms could be beneficial on both sides. If a retailer isn’t a great fit, with a shorter lease length, they can vacate sooner.
Retailers have already been through the battles of adjustment, and by default, commercial real estate, particularly the retail sector, needs to realign and adapt to the new changes.
With major adaptations, malls will not and should not look the same as they did just a few years ago. The pandemic changed everyone, but it did quite a number on most retailers and malls. As a result, retailers who were on point and aware, adapted quickly and many adaptations, such as in store and curbside pick up and delivery, are sure to stay.
Malls may no longer continue as the anchor stores and slew of boutiques in between. There will be emphasis on services, such as cell phone repair, eyebrow and eyelash salons, and doggy daycares. As major departments stores reimagine their store formats, less space will be needed in the anchor spaces. Anchor vacancies may be redeveloped into luxury condos, event venues, schools, and more.
Sprinkled in with these newer mall concepts will be those thriving retailers looking to expand. Excited about new lease terms, retailers will be filling the mountain of vacancies and leading malls to significant recovery.
It’s true, leasing is not how it was 10 years ago or even a year ago. If leasing agent’s aren't more flexible for retailers, the mall won’t survive. As we saw throughout this past year, retailers who adapted quickly thrived and did better than anyone could have predicted. If leasing agents embrace the idea of adapting and becoming more flexible with lease terms, the benefits will extend to both retailers and malls. The world has changed, and we all have to change with it, always to become better than before.
Is your retail portfolio ready for a reformation? The vacancies that have stuck are making you suffer and we don’t want you to suffer. There are plenty of retailers ready to expand. Retailsphere researches and collects data on every single retailer in the United States, having information on verified real estate contacts, preferred demographics, expansion plans, consumer reviews, and more. Jump on a demo with a Retailsphere professional to discover your next retail tenant.