Strip Malls: New King of Retail Real Estate
Going to a strip mall for a specific item is a quick in-out activity, akin to getting milk from 7-11. And after the pandemic, that’s what many Americans want.
NEW YORK – Largely owing to pandemic-driven behavior changes, Americans have developed an insatiable appetite for strip malls. These destinations, also referred to as convenience properties, historically have lagged grocery store-anchored shopping centers; but today’s buyer, who likely works remotely at least a day or two, prefers retail that is close to the road and fast to get in and out of.
“The consumer has changed because of the post-COVID world,” says RetailStat’s Josh Suffin. “Beyond the work-from-home (trend), the whole world is changing in how quickly things move.”
Based on data from 2,500 locations, the real estate data-analytics firm reports that traffic to strip malls jumped 18% in 2022 compared to pre-pandemic numbers.
With the rising demand comes rising prices, data from CoStar Group suggests. According to it, asking rents climbed to $20.37 per square foot on average in the third quarter of this year – up 17.3% from the corresponding period of 2019.
The activity has not gone unnoticed by the investment community. MSCI Real Assets estimates that nearly 90% of unanchored-retail center deals through the first nine months of the year were purchases by private investors, with publicly traded and institutional investors accounting for about 9%.
Source: Wall Street Journal (10/30/23) King, Kate
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