From August through October of 2021, total sales were up 15.4% from the same period a year ago. U.S. retail and food service sales for the month of October alone were $638.2 billion, up 1.7% from the previous month despite rising inflation and supply chain disruptions.

These figures make it clear the retail sector, buoyed by the arrival of the holiday shopping season, is well on the road to recovery. And not just for online sellers: research from Deloitte reports foot traffic to stores will be up 11%this year for Black Friday shopping.

However, not all retail environments are experiencing this same outcome. Shopping preferences and consumer behavior have altered, causing a diverse array of outputs for retail’s various formats. While all is merry and bright for grocery-anchored retail and fast-casual, malls and sit-down restaurants are on thinner ice as they struggle to return to pre-pandemic levels.

Shopping Centers Mirror Consumer Preferences
Emerging from the pandemic, there’s remains strong demand for in-store experiences, and openings continue to outpace closings as retailers expand their footprints across brick-and-mortar locations.

However, attracting shoppers from the convenience of e-commerce has proven a tall task for traditional malls. Despite the fact that “mall Santas will be back to normal this year”, overall visits declined in September according to Visits to indoor malls was down 6.5%, a regression that “marks a continued interruption in the steady recovery the sector had enjoyed since the beginning of the year, which was driven by pent-up demand.”

On the flip side, strip malls anchored by grocery stores have had a steady rise and attracted increasing capital from investors. Most recently, Blackstone acquired five Publix-anchored retail centers in South Florida for nearly $426 million, reported by the Real Deal.

 In addition, an asset class expected to grow in 2022 are lifestyle shopping centers. The combination of multifamily, retail and office space provides a “modern-day interpretation of a mall” that has the lowest average vacancy compared to malls. On the rebound from lockdown, this community-focused format appeals to many looking to connect where they live, work and play.

Food & Dining is Hot and Cold
New research from the NPD Group reports dine-in restaurants are struggling to reach pre-pandemic levels, with visits down 48% in the 12 months ending September 2021 compared with September 2019 while also facing, “shrinking margins with higher food, fuel, labor and transportation costs.”

In stark contrast to dine-in preferences, consumers have a strong appetite for fast casual settings and off-premise services. The NPD group reports a 20% increase for locations that offer drive-thrus, carry-out or delivery, and visits to fast-casual were up 8% overall as of August 2021.

Grocery remains a high-performing asset, and Q3 data showed foot traffic was up 7% over 2019 visits. Places like Costco and Hy-Vee continue to expand offerings and draw shoppers, including Hy-Vee’s recent grand opening of its “reimagined” supermarket which includes a pub and food hall.

The Future for Underperforming Properties
While some retail asset types will continue to thrive, others will find new purpose as the need for industrial space, data centers and more continues to rise.

According to Coldwell Banker Commercial’s mid-year outlook, “retail will be all about repurposing. New occupiers will likely give prominence to the live-work-play idea and could include entertainment venues, healthcare clinics, ghost kitchens, cannabis dispensaries, distribution facilities, and e-commerce warehouses.”



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