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The retail industry has a direct effect on commercial real estate. Consumers cause shifts in the industry as they’re shopping habits change over time. Today, more people are buying online and having their purchases shipped directly to their homes. This has caused many stores such as Macy’s and Sears to close. When store closures begin taking place it can place other retailers at risk as well. The domino effect that transpires has a major impact on commercial real estate.


Store closures have many investors reconsidering making investments in retail altogether. This can be particularly true of investors interested in commercial real estate properties. However, both the retail industry and commercial real estate have seen opportunities present themselves to take advantage of this time in history. While places like shopping malls are closing at an increasingly rapid speed there have been properties opening up that contain huge amounts of square footage. A new trend has emerged: converting shopping malls into distribution warehouses and mixed-use centers.


It makes sense that warehouses and distribution centers could take the place of many outdated malls. As consumers spend more time buying online there is a need for more facilities to manage all of the delivery orders. The downside of this conversion venture is that it often requires that the retail properties be rezoned into industrial type listings. These industrial spaces do not generate nearly as much in sales, income, and property taxes which can cause pushback from the surrounding communities.


An alternative to the industrial warehouses are mixed-spaces. Mixed-space is becoming very popular among commercial real estate professionals and the communities they serve. The areas consist of office spaces, condos, restaurants, and retail stores. Consumers can walk outside of their homes and grab a coffee, shop, and stop for groceries without going far from home. Mixed-space centers, sometimes called “lifestyle centers” allow people in the suburbs to feel as though they haven’t quite left the city. People can be engaged, which is shown to be important to the consumers of today. These indoor/outdoor centers create the environment so many wish to experience while spending money.


Commercial real estate companies that have redeveloped these spaces with lifestyle centers have seen great success all over the country. These centers vary from place to place but often consist of healthcare facilities, fitness studios, retailers, and office spaces. Having such a broad range of facilities can actually accommodate investors and landlords. Popup shops that were once undesirable have become popular with consumers and with enough space landlords can permit businesses to have incubator spaces and popup cuisine venues. People are interested in things that are new and different and the spaces bring in traffic.

With all of the shifts in commercial real estate taking place due to changes in retail, there are a plethora of things for investors to work out. Lease restrictions and working out the details of what shared work spaces look like are two of the areas that will need a bit of contemplation. However, it will be interesting to see what commercial real estate developers continue to seek out and make of the opportunities that the retail industry is creating.