Do Americans now prefer strip center shopping?

Discussion
Photo: Getty Images/leezsnow
Dec 22, 2021

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.

DISCUSSION QUESTIONS: What obvious and less obvious factors are driving the appeal of strip centers and grocery-anchored retail? What do you suspect will be the hot spots of retail real estate in coming years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Convenience, safety, selection — open-air shopping ticks so many boxes today and as a consumer, I am all for it. "
"I suspect many owners of large regional malls are formulating plans to re-configure their spaces."
"Strip malls that are well appointed with the right mix of retail will continue to do well into the future..."

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23 Comments on "Do Americans now prefer strip center shopping?"


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David Naumann
BrainTrust

Convenience is the primary driver of the increased success for strip centers. Even prior to the pandemic, busy consumers have been gravitating to strip center shopping as an alternative to malls. Strip center retailers are typically closer to shoppers’ homes and the big advantage is more convenient parking making shopping more efficient.

Zel Bianco
BrainTrust

Outdoor strip centers, I believe, are popular and will continue to be because they do feel more like a village when compared to indoor malls.

Steve Dennis
BrainTrust

One of the biggest outcomes of digital disruption has been the many aspects of bifurcation that have emerged, chief among them being the collapse of the middle and the distinction between buying vs. shopping or, stated differently, running errands vs. seeking out experiences. Regional mass used to serve both of these masters because it was both efficient and effective to make the journey for both the tasks we need to get off our to-do lists AND meeting our broader emotional needs and wants. But the rise of category killers and discount merchants decades ago and off-price and online retail more recently, has taken away many of the reasons to go to the traditional mall. So it’s not so much a simple statement of what Americans prefer, it’s a shift to the hegemony of neighborhoods and power centers (and e-commerce) for buying and destination retail for shopping. In a world where convenience has been re-defined malls can still have an important role. It’s just far smaller.

Liza Amlani
BrainTrust

Convenience, safety, selection — open-air shopping ticks so many boxes today and as a consumer, I am all for it.

Today’s consumer prefers strip center shopping and we will continue to see healthy lease demand for the next few years.

Open-air shopping centers also give a retailer more opportunities to connect with the customer and build deeper relationships, building brand loyalty.

The days of a stuffy shopping mall are gone. And I’m sure we agree, if shopping malls are not evolving, they won’t survive.

Ken Morris
BrainTrust

Strip centers, or what I call town centers, are the new mall. They were very popular before the pandemic and are even more so today. They have the open-air appeal, they are located close to where you cocoon and are anchored by what you need. Having a Whole Foods or a Wegmans makes this a more frequent destination vs. the mall, which is more product specific and rarely shopped for staples.

Also, as CVS and Walgreens add healthcare clinics to their offerings, there will be even more traffic for other stores nearby. As far as BOPIS is concerned, it is easier to do at strip malls vs. traditional malls, but the parking lots are often a bit trickier to reconfigure. Landlords will have to be cooperative to make it work.

Neil Saunders
BrainTrust

Open air shopping centers have outperformed traditional malls for the past few years. However there are several types of outdoor centers. Strip malls have been popular, mainly because of the presence of popular retailers such as Target, TJX and others. Their focus is convenience. More luxurious outdoor centers – such as Scottsdale Quarter here in Arizona – have also performed well. However this is mainly because of the presence of higher-end and niche brands, as well as lots of lifestyle features such as restaurants and coffee places. Of course, the other side of this coin is the relative lack of investment in some traditional malls and the presence of waning retailers such as Macy’s and JCP, which no longer pull in the crowds.

Lisa Goller
BrainTrust

Strip centers allow easy BOPIS and curbside pickup, and tenants avoid being trapped in a shuttered mall due to lockdowns.

Retailers save delivery costs if shoppers pick up in stores and shoppers can benefit from faster returns than if they need to walk through a traditional mall.

Home will remain our hub for a while, so real estate that gives retailers pervasive local reach across cities and suburbs will boom.

Richard Hernandez
BrainTrust

In my area, open air strip centers did not suffer during the pandemic but experienced increased traffic. In many cases they are closer than the closed-in malls and offer the same assortment (or sometimes more). I suspect these “retail lifestyle centers” will continue to grow.

Michael La Kier
BrainTrust

Easier access and convenience are driving consumers to strip malls (pun intended) and making shopping convenient is always a winning path.

Melissa Minkow
BrainTrust

I actually think this is an example of how online shopping is influencing physical retail behaviors. Consumers have become accustomed to having all their favorite stores under one virtual roof, and now they want that again in person.

David Spear
BrainTrust

Shopping strips are highly preferred for a variety of reasons, chief among them are convenience and utility. A shopper typically enjoys free parking, walks short distances, gets in/out quickly, and doesn’t have to drive miles upon miles to get to the destination. Add simple ingress/egress from main thoroughfares + throw in an attractive BOPAS service and you have a WINNING formula that will gain momentum over the next several years.

Georganne Bender
BrainTrust

It’s kind of a double edged sword, isn’t it? The pandemic has made us uneasy about indoor spaces and malls have suffered because of that. But even before the pandemic we saw a number of retailers leave enclosed malls, and consumers are finding that the places they want to shop are no longer at their favorite mall. At least around here.

In the suburbs of Chicago, where I live, many mall retailers have left to open freestanding stores in strip or town centers. Few of these strip centers have grocery stores as part of the mix, but there are restaurants, coffee shops and seasonal entertainment; you feel like you are in the midst of community. Because these centers aren’t in a building that always looks the same we are willing to shop in the middle of winter and the heavy humidity of summer. That says a lot about the center and the retailers that inhabit it.

Jenn McMillen
BrainTrust

Open air or traditional mall: it all boils down to whether the parking is easy.

Gene Detroyer
BrainTrust

Convenience, convenience, convenience. “Gee, while I am at the drug store, I will stop and pick up some things at the supermarket.” “After I finish at the gym, I will meet you for a cup of coffee.” “After lunch let’s swing by Best Buy and see what is new.”

Just as convenience has driven the growth of online, the convenience factor is driving the growth of these open air malls or, as Beck says, the new Main Street.

In the Golden Age of Malls, going to the mall was not just for shopping but for the experience and entertainment. It also took a half a day of time. Going to the new Main Street delivers what the shopper needs or wants within a few miles of home and the shopper is back home in an hour or less.

Ron Margulis
BrainTrust

There has been and will continue to be a move toward integrating non-retail outlets into strip malls. These include medical clinics, gyms and even temp office space and hotels. This all amounts to a reshaping of the traditional strip mall into a more comprehensive “community” of services for a much larger audience.

Rich Kizer
BrainTrust

It sounds to me like many people are surprised at this development and its success. Productivity in these locations has already shown that good retail has found another channel.

Some thoughts: Landlords must be vigilant about the qualifications of the retailer and understand their history of successful retail operations. Beyond that vigilance, it’s a go in my opinion. Everyone on the “block” should definitely see the rise in footsteps and sales. And that’s the goal!

RandyDandy
Guest
7 months 23 days ago
If aesthetics count for anything, and they should, then neither strip or enclosed malls have done anything to make the American landscape anything but worse (looking) over the years. And about them, strip malls that is, becoming the “new” Main Street? Heaven help us all, if that’s what “they” are becoming. Truth is, most of these constructs have been, and remain, focused first on cars, and in getting consumers to and from these places as swiftly as possible optics always follow. Thus what you get are default looks on all levels, from homogenized storefronts (with windows not so much made for “shopping” as for passing by as you seek out parking) to the ghastly visuals of row after row of vehicles in the forefront. By the way, isn’t that what large, enclosed malls did with cars: making up the majority of their vastness outside — and then compounding bad optics by “fortressing” the stores themselves?! Meanwhile, considering current trends, bad ones, does anyone wonder what higher security risks these “strip” operations are — by being… Read more »
Patricia Vekich Waldron
Staff

Easy access and convenience will always drive consumers to shop strip centers (providing the brands and retailers are relevant)!

Craig Sundstrom
Guest

I’m not disputing the numbers, but I question the comparison (between strip centers and “malls”). Specifically, there’ve always been a lot more of the former than the latter, with all but the largest metro areas having dozens — hundreds? — of strip centers, but only a few malls; a grocery store is essentially a unit of a neighborhood, whereas a department store and the shops around it are a unit of a city. The battle that malls are fighting and seemingly losing is against online (and recently the pandemic) … it’s not against neighborhood centers.

James Tenser
BrainTrust

Open-air shopping centers have plenty of appeal in warmers climes and warmer seasons. Here in Southern Arizona we have seen at least one enclosed mall transformed into an open-air concept (with shaded walkways).

We have also seen a regional mall transformed into a hybrid “lifestyle” center that combines enclosed space with exterior storefronts on the perimeter, enabling a blend of quick drive-up patronage and longer visits.

But these options fit better in regions with little or no snowfall and plenty of elbow room. Indoor malls still have reasons-to-be in cooler, wetter parts of the country.

I suspect many owners of large regional malls are formulating plans to re-configure their spaces. Big anchor stores, especially, may need to be divided or razed in some cases. My notion would be to convert some of those to parking decks, freeing spaces now covered in asphalt for other perimeter destinations like restaurants, fitness, and health centers.

Ananda Chakravarty
BrainTrust
Strip mall shopping has been the preferred shopping option for years. The New York Times writes that there are about 1,150 enclosed malls in the US. An article from over 7 years ago identifies over 65,840 strip malls at the time. Our population has always been more attuned to strip malls than large enclosed malls. These strip malls are lower cost, easier access, closer to residential areas, and provide convenience services from dry cleaning to fast food and grocery. There will be some demand shift to strip malls, but the discrepancy is so large, don’t expect that a few closed malls will suddenly pick up steam for strip malls. The trends are showing slight drop offs in travel to malls, but it’s these malls that have the theaters, fancy restaurants, and compilation of many stores that will continue to drive foot traffic. I expect a resurgence to mall shopping, or at least a stemming of the foot traffic drop off for A and B malls. Other than that, customers will continue to buy where it’s… Read more »
Brian Numainville
BrainTrust

It makes sense that strip malls are faring well compared to the traditional mall that takes a great deal of effort to get to, get in, and get out of in any reasonable period of time. Strip malls that are well appointed with the right mix of retail will continue to do well into the future given greater convenience, better parking, and ease of shopping.

storewanderer
Guest
7 months 23 days ago

The malls were dealt another blow in some states by mandated closures over the past 21 months as well.

In some cases, at least in California, these open air strip centers were allowed to be 100% open, but the enclosed malls were ordered closed by state order.

Malls have been losing traffic for years. The above did not deal “the” blow to malls but it did cause yet another “conditioning of the customer to shop outside the mall.”

The strip center thing is interesting to evaluate. Do the small in line retailers do as well in strip centers as they do in malls? I feel like strip centers lead to you driving up to an anchor or two then leaving, not lingering and seeing the smaller shops as you do while walking through a mall.

wpDiscuz
Braintrust
"Convenience, safety, selection — open-air shopping ticks so many boxes today and as a consumer, I am all for it. "
"I suspect many owners of large regional malls are formulating plans to re-configure their spaces."
"Strip malls that are well appointed with the right mix of retail will continue to do well into the future..."

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