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Navigating The Evolving Retail Landscape: Opportunities And Challenges For Commercial Real Estate

By April 24, 2023No Comments

The evolution of the commercial real estate market has been marked by changes in leadership, new classes of space, and new services and offerings.

In addition to these shifts in leadership, classifications, uses, and amenities available in buildings have changed over the last few years due to increased development.

These changes have created demand for larger spaces with higher-end features and equipment. Heavily trafficked spaces such as restaurants or a retail store that you need a good location for will also drive up demand as they need a good location to put their business.

New services and offerings have emerged within the commercial real estate community to help navigate the changing landscape.

Opportunities for commercial real estate investors

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

As technology continues to advance, real estate investors will continue to make gains. Because of his or her exposure to technological advances, the investor can gain new clients, increased revenue, or even a purchase price increase.

Since 2012, there have been several tech-based changes affecting the commercial real estate market. The first was when software developers created mobile app platforms such as Android and iOS devices. This made it easier for clients to find properties as they became more widespread.

Nowadays, most real estate investors have a smartphone and a computer connected to their phone. Many have apps for searching properties and sending inquiries that are set up on their phone.

Challenges for commercial real estate investors

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

As retail continues to shift from neighborhood to neighborhood, city to city, and store to store, investing in commercial real estate is a valuable tool in your investment portfolio.

Today’s retail districts are dynamic and changing structures that can feature large anchor stores with secure parking, or smaller specialty stores with a concentrated market.

Authentic-looking buildings with high-quality promotions and special discounts are keys to attracting customers. If you can find a place of worship or an educational institution, you will have a hard time finding a vacancy.

The rules about zoning and construction are more restrictive in some places than others, making the transition from residential to business very fast-and-you’ll-be-there for new owners.

Understanding the retail landscape

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

The retail landscape has been evolving, growing and changing over time as new businesses are constructed, renovated, and placed in existing structures.

These changes can be rapid and constant, making it difficult to determine what is the next big thing in retail. Hovering between neighborhood anchor stores and full-fledged shopping malls, department stores, and boutiques are common.

Moreover, this coming generation will have no memory of a time when certain stores did not exist or did not hold much value. For example, a young person today will remember days when it was hard to find something worth buying because there were so many options available.

Because of this rising demand for consumer goods, developers are creating ever-expanding complexes that feature multiple shops and services.

Retail is not dead

While many have called the arrival of retail winds de-facto signaling the end of shopping malls and shopping centers, this is a point that many do not understand.

Industry experts say that there will be a need for over 500 new retail spaces every year from 2020 to 2025, making it one of the leading trends in commercial real estate today.

Newly built spaces will have been online since their construction, making for some pretty incredible views and interior design options. Even if you do not plan on buying a new store or shop, being in a commercial property is exciting.

Many new builds will have private clubs, restaurants, and stores attached which really complete the space and add to the experience of what you are walking into.

Online shopping is not killing off retail

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

Online shopping has increased significantly over the past year. With every passing day, there is a little more room in the commercial real estate market for new stores and shops.

Many new stores are opened directly off of the internet, making it very easy to shop and move through products. This is helpful as many people now have access to the internet all day which makes for more exposure to their customers.

People are spending more money overall because they have more product options to choose from and newer products that they are interested in. This increased spend can be a positive effect on property values as people buy things to decorate and feel comfortable in their space.

Overall, business owners should not be worried about this changing anything too drastically. New business models continue to emerge and grow so long as people can attract customers with new methods of advertising.

Mall vacancies increase while shopping centers fill up

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

There’s a never-ending supply of shopping centers and malls which fuels competition for space and puts additional pressure on owners and operators to meet consumer demand with new developments.

This competition is great for consumers, who can now find what they are looking for in one place! However, it can be challenging for commercial real estate professionals, who have to determine whether a new development will help or hurt their property value.

Part of this challenge comes from there not being a clear definition of modern commercial real estate that everyone agrees on. While some consider streaming video games an essential part of the commercial landscape, others would only consider that if it was located inside a mall or center.

Finding the right balance between being current and establishing their legacy can be tricky for property managers.

Commercial real estate opportunities with retail properties

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

There are several scenarios where a property with a commercial zoning designation could have greater opportunity to feature a large public access or shopping facility, or additional office space.

Some examples include: A large, recently renovated industrial property that would be ideal for a large retail anchor, or an existing building that needs additional space.

The latter scenario could be useful for small to medium-size business owners who need more office space than can be found in a single building. Another potential benefit is the increase in foot traffic the property may receive, which can raise visibility and thus sales.

It is important to note any potential restrictions that may apply on the property’s use. Application of solar power technologies and the installation of water tanks are also required for potential changes on the property.

Leadership skills needed for commercial real estate investing

Navigating the Evolving Retail Landscape: Opportunities and Challenges for Commercial Real Estate

As the world continues to shift towards digital and mobile-first experiences, leadership skills are in demand. As someone new to the business, you can look for leadership positions at a higher level than currently exists.

As president of a company or director of a corporation, you hold power and influence over other individuals and companies. As a leader, you need to be able to build and maintain relationships, which is key in today’s business environment.

You also have to be able to recognize opportunities and develop strategies for them, which includes both self-awareness and self-confidence. As the leader, you have to have the ability to put out consistent messages so those around you know what you want them to hear them read.

These qualities can be hard to find and stay inspired in the high-stress environment of business, but with some guidance from colleagues or invested time in their development, they can come out as strong leaders.


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