Open-air shopping centers — also known as strip malls and strip centers — are leading retail’s real estate recovery and building on momentum seen before the pandemic.
Landlords filled 17 million square feet of open-air shopping centers during the third quarter, according to CBRE data reported by The Wall Street Journal. The influx marks a 49 percent hike from 2019 and a 10-year high for net absorption.
JLL’s “Retail Recovery” study likewise found strip centers leading the bounce back in rents and vacancy. JLL wrote in the report, “Open-air centers, particularly those with essential tenants like grocery and drug stores, have performed consistently better since 2020. Malls, already faltering prior to COVID, especially B and C malls, saw an accelerated performance decline.”
Open-air shopping centers, whether big or smaller neighborhood locales, often benefit from being anchored by grocers, which continue to see healthy traffic from the home cooking trend, despite the reopening of many restaurants. Many big boxes have also become stronger traffic drivers with the added appeal of one-stop shopping.
MRP Capital Group, a real estate investment firm, acquires Walmart “shadow” centers, or strips located near the discount giant. Managing partner Jordan Breck told the St. Louis Post-Dispatch, “It’s kind of the new Main Street where Walmart is the center of these communities.”
Curbside pickup, which has exploded in use during the pandemic, is also easier to pull-off for big boxes and other chains at open-air centers than at enclosed malls.
Often further supporting steady traffic at open-air centers are the inclusion of drug stores, fitness centers, hair salons as well as dental centers and other services.
The shift toward remote work has also been a boon for strip centers as people have resettled to suburbs or are spending more time near their homes, supporting shopping closer to home and more weekday visits. Strip centers, more so than traditional malls, can suit a wider selection of tenants looking for tighter spaces and more visibility from major roads.
In October, JLL reported that leasing demand for lifestyle centers, also open-air and often part of mixed-use developments, was resurging as digitally native brands and traditional mall retailers emphasize off-mall growth strategies.
- Open-Air Shopping Centers Are Leading Retail Recovery – Wall Street Journal
- Open-air retail complexes enjoy breath of fresh air, hitting new peaks amid recovery – The Real Deal
- Clayton real estate firm sees opportunity in Walmart’s shadow – St. Louis Post-Dispatch
- America’s Malls Spiraling Towards Sweeping Reset – Wall Street Journal