As a retail architecture founded firm, we are always closely monitoring the trends and reports coming out of the industry. Whether we are examining restaurant movement, grocery stores, or discount clothiers, we are following along.
Retail real estate has been enjoying its biggest revival in years as a direct reaction to pandemic-related behaviors. In the fall of 2022, commercial real estate firms reported that retail vacancy in the U.S. fell to its lowest level in 15 years (Source). Also, Morgan Stanley reported that more stores opened than closed in the U.S. for the first time since 1995–and this trend is expected to continue even with recession whispers constantly on the horizon.
While the pandemic pushed consumers towards e-commerce during restrictions, shoppers proved there are some things that just need to be seen in-person and touched. This phenomenon has commingled with the continued remote employment movement to create another related effect in city downtowns—retail is moving back to the suburbs.
No longer commuting to downtowns, consumers are turning to their suburban bases for retail experiences. As a result, retailers in city office districts are moving their operations to the suburbs according to the Wall Street Journal. The article reported pedestrian foot traffic was down 25% in April of 2023 compared to the same month in 2019.
Even the notorious Sweetgreen, a big city staple known for their cult following but high-priced salads, has closed several locations in Los Angeles, Boston, and New York City, moving half of its footprint to suburbs.
Shockingly, high inflation and rising interest rates have still not dampened the trend. Firms who track these statistics recorded record-high leasing in the first quarter as well as new highs for occupancy. As noted by Simon Property Group (the mall retailer who owns Haywood Mall in our home base of Greenville, SC), foot traffic is up in high-end enclosed malls that were hit so hard by the pandemic.
While companies are pushing a return to in-person work agenda, the general view of economists is that there will always be a permanent part of the work base never working in the office. And as one restaurateur said, “We just want to be where the mouths are, whether they’re at home or in the office. (SOURCE).”