S
helley E. Kohan: Welcome to Retail Unwrapped. I’m Shelley Kohan, and today I’m joined by Stephanie Cegielski, VP of Research & Public Relations at ICSC and NYU professor, and Steve Morris, founder of Strategic Advisor Asset Strategies Group (ASG) and CBUS Retail Group, also a published author. Thanks for being here.
Stephanie: Thank you, Shelley.
Steve: Glad to be here.
Shelley: We’ll dive into retail real estate—last year’s trends, the current market, and what’s ahead. Stephanie, you just wrapped up the ICSC conference in New York. What stood out?
Stephanie: The ICSC New York event at Javits was electric. Attendees were optimistic—deals were still closing, venture capital was flowing into prop‑tech, and overall sentiment was surprisingly upbeat, even against the backdrop of negative headlines.
Steve: ICSC has long been a bridge between retailers and developers. Over the past decade, the balance has shifted toward developers. Since the 2007 crash, new retail construction has stalled; about 150 million square feet have been demolished, leaving a tight supply of prime space. Retailers now chase the best locations, and lenders are cautious, so we see more redevelopment than new builds.
Shelley: Yet retail sales have surged since 2007, adding more retailers and intensifying competition. That tight supply must be driving up rents and forcing retailers to rethink their footprints.
Steve: Absolutely. New entrants—direct‑to‑consumer brands, medical spas, fitness clubs—are demanding space. Occupancy rates hover around 96‑97 %. In 2023, we saw roughly 10,000 store openings versus 5,000 closures, a reversal of pre‑pandemic trends. The lack of new construction, coupled with high borrowing costs, means most growth comes from repurposing existing sites.
Stephanie: Retailers are shrinking and reconfiguring. Omnichannel has become essential; many stores now allocate space for buy‑online‑pickup and returns. Even large brands like Bloomingdale’s are opening smaller, “micro‑store” concepts to match local demand. This forces developers to consider smaller, more flexible footprints.
Steve: Take Columbus, for example. The market once had a dozen Victoria’s Secret stores; now only a handful remain. Retailers must balance store count with higher sales per square foot, leveraging e‑commerce to sustain profitability. The trend is toward fewer, larger, more efficient stores.
Stephanie: Malls are giving way to open‑air centers and suburban nodes, aligning with the live‑work‑play model. Zoning reforms and the rise of DTC brands have made it easier to locate outside traditional mall cores. Retailers now use data to identify “nodes” where they can drive traffic without relying on anchor stores.
Shelley: That shift also changes the physical footprint. Stores need dedicated pickup zones, integrated back‑rooms for fulfillment, and flexible layouts to support unified commerce. The design of a store is now a supply‑chain hub as much as a retail space.
Steve: Exactly. The pandemic forced retailers to invest heavily in e‑commerce infrastructure—fulfillment centers, return logistics, and in‑store pickup. This reoriented the entire supply chain, making back‑room space a critical asset.
Stephanie: Parking has evolved too. With the rise of convenience shopping and one‑click purchases, customers want quick drop‑off and pickup. Parking design now prioritizes short‑stop access over long‑term parking, reflecting changing consumer behavior.
Shelley: Speaking of convenience, EV charging is becoming a new draw for retail sites. Have you seen any successful implementations?
Steve: In the convenience‑store sector, charging stations are a new revenue stream. They attract drivers who might otherwise skip the store, but infrastructure costs can be prohibitive. In some cases, the added traffic justifies the investment; in others, the grid limitations make it challenging.
Stephanie: AI and advanced analytics are reshaping site selection. Mobile data, GPS, and demographic layers feed into machine‑learning models that can evaluate thousands of potential sites in minutes. This data‑driven approach lets developers and retailers pinpoint the best locations at the zip‑code level.
Steve: At ASG, we use similar tools. When deciding whether to renew, remodel, or close a store, we generate a mobility trade‑area model on the fly. It shows overlapping customer bases, projected foot traffic, and the impact of a closure on sales. The data speeds up decision‑making, but human insight remains essential.
Shelley: Let’s talk leases. How has the negotiation landscape changed?
Steve: The market is highly creative. We’ve analyzed over 20,000 leases, including 5,000 COVID‑related amendments. Both sides are willing to mix flat rent with percentage rent, or even reverse the structure mid‑term. Off‑mall and mixed‑use projects offer unique deal structures that can benefit both parties.
Stephanie: Diversification of tenant mix has become a hedge against downturns. Post‑COVID, we see a shift toward health, fitness, and wellness tenants. Lease terms are also evolving—shorter, more flexible agreements like pop‑ups are replacing long‑term commitments, giving retailers agility.
Steve: Both sides want protection. Retailers need certainty against e‑commerce volatility, while developers need leases that can be financed. The collaboration has improved; banks and governments have been more flexible during crises, fostering a more cooperative environment.
Shelley: Mixed‑use developments seem to be the future, blending retail, dining, and living spaces.
Stephanie: Mixed‑use sites thrive when they offer diverse dining options and entertainment. The post‑2020 rebound shows that people still value shared experiences, though saturation and inflation are tempering growth. Still, the variety keeps foot traffic alive.
Steve: Value shoppers and treasure hunters are a permanent shift. Middle‑income consumers now prioritize bargains, and that trend is unlikely to reverse. Additionally, the growing GLP (growth‑lifestyle‑product) segment—health spas, wellness centers—will expand, potentially reaching 10 % of the population. Retailers that adapt to these lifestyle shifts will succeed.
Shelley: Thank you both for sharing these insights. It’s clear that retail real estate is evolving rapidly, with data, flexibility, and collaboration at the core.
Steve: Thanks, Shelley. Great conversation.
Stephanie: Thank you, Shelley. Appreciate the opportunity.
