The Resurgence of Neighborhood Strip Centers
Traffic to strip malls was up 18% in 2022 compared to pre-pandemic numbers, according to a RetailStat analysis of 2,500 properties. The "buy online, pick up in-store" (BOPIS) model and the growth of e-commerce are driving a rebirth of local strip centers in the ever-changing retail landscape. These hitherto disregarded commercial assets are becoming more and more alluring investment options for astute real estate investors as consumer shopping patterns change.
E-commerce Fuels Strip Center Demand
Although the rise of e-commerce has drastically altered customer purchasing behavior, physical retail locations are still necessary. In fact, neighborhood strip centers—which provide the perfect balance of accessibility and closeness to residential areas—have seen a revitalization because of the ease of BOPIS.
Strip centers are vital locations for online purchase pickup and return services as more merchants adopt omnichannel strategies. The demand for well-located strip center locations has increased as a result of this trend, especially for those with enough parking and simple access for customers making quick stops.
Tenant Diversification and Mixed-Use Potential
Strip centers need to change to survive in this new retail landscape. They should look into mixed-use elements and vary their tenant mixes. Future successful strip centers will probably combine traditional merchants with service-oriented companies (such gyms, hair salons, and doctor offices) and unique experiential concepts that are hard to get online.
Strip centers can develop dynamic, community-focused destinations that meet the changing requirements and desires of modern customers by bringing in a varied range of tenants. The appeal and long-term viability of these sites can also be improved by adding residential or office components. For further discussions on this topic, check out this video from YouTube channel Joe Killinger.
Repositioning and Value-Add Opportunities
Existing strip center assets offer attractive potential for value-adding and repositioning to investors. Modern, appealing retail hubs can be created from outmoded or underperforming strip centers with smart restorations and remerchandising.
Important value-adding techniques could be:
Improving common area amenities and curb appeal to make the space feel cozier
Rearranging tenant premises to meet the demands of recently arrived, in-demand renters
Reducing operational costs by implementing energy-efficient upgrades and sustainable design elements
Utilizing parking lots or underused land to create compatible mixed-use development
Investors can realize substantial value and position their strip center assets for long-term success in the changing retail environment by putting intelligent repositioning plans into action.
Capitalizing on Experiential Retail Anchors
Experiential retail ideas are becoming popular anchor tenants for neighborhood strip centers as customers value experiences over traditional shopping more and more. These kinds of tenants have the power to draw foot traffic and foster a feeling of community around the strip mall. Examples of these tenant categories include immersive art installations, interactive fitness studios, and entertainment venues.
Strip center owners may set themselves apart from the competition, draw in a wide variety of complimentary tenants, and establish a destination that appeals to today's customers looking for unique, shareable experiences by acquiring experiential anchors.
Neighborhood strip centers have the potential to experience a resurgence as the retail landscape continues to change. A clever investor can profit from the resurrection of these once-overlooked commercial assets by embracing experiential retail anchoring, tenant diversification, strategic repositioning, and e-commerce integration.
If you are interested in strip center or other commercial property investments, don’t hesitate to reach out to us at info@cbicommercial.com or 310-943-8530.