Consumers have apparently gotten tired of ordering everything while sitting on the couch and have returned to shopping the old-fashioned way. They want to see and feel the products they are considering and after being cooped up at home for two years, they want the social experience of shopping. Online sales of big-ticket discretionary items, like electronics and furniture, have decreased significantly. Inflation is largely to blame for this, however, a contributing factor is that consumers also want to save the delivery fees.

As the Covid era begins to fade into the background, the overall market average rental rate has remained essentially flat from year end. However, for the reasons just mentioned, user activity in the market is generally strong, particularly among anchor scale tenants. In-line leasing is slow however, particularly with “national” tenants. In spite of this, the pace of new construction in the second half of 2022 is strong. One trend to take note of is the small infill site. Rather than building one larger strip, two smaller buildings are built. This better accommodates multiple drive-throughs and creates more high-value endcap spaces. 

A factor in the market’s improving metrics is the ongoing redevelopment of marginal centers/locations or physically obsolete spaces in strong locations. As a result, the total square footage devoted to “retail” continues to shrink. However, America’s workers are beginning to return to the office which is driving an uptick in demand for office space rentals. Enter the repurposed, multi-use, large-format center. This trend takes outdated structures, such as malls, and renovates them to host an anchor or two combined with smaller in-line spaces, restaurants, entertainment venues, and, yes, office space.