2024 Retail Real Estate: Wellness, Community, Competition

In 2023, the retail real estate sector experienced significant shifts, influenced by changing consumer preferences and the availability of high-quality retail spaces. These trends are expected to continue shaping the industry in 2024, with several key themes emerging.

Wellness on the Rise : The wellness sector is experiencing a surge, driven by consumer interest in health-conscious products and experiences. Consumers are increasingly seeking holistic health solutions, leading to a rise in wellness-oriented retail brands. This trend is evident in the opening of new wellness stores, which increased by 2.8% in 2023, outpacing sectors like luxury and jewelry.

Community-Centric Spaces : As top malls reach saturation, brands are turning to neighborhood centers and freestanding locations to connect with consumers. Popular streets like Abbot Kinney in LA and South Congress in Austin continue to attract retailers, while smaller towns are also seeing growth in retail spaces. Neighborhood centers are emerging as quality alternatives to traditional malls, offering a sense of community and authenticity that appeals to modern consumers.

Limited Spaces, High Competition : The retail vacancy rate in the US hit a record low of 4.6% in December 2023, driven by high demand and limited supply. Construction of new retail spaces has slowed, leading to a scarcity of prime locations. This competitive landscape is forcing retailers to rethink their real estate strategies, focusing on creating unique and memorable brand experiences in limited spaces.

Adapting to Change : Retailers and landlords alike are adapting to the evolving retail landscape. Landlords are investing in marketing and events to support tenants, while retailers are reimagining their business models to stay competitive. The pace of change in the industry is accelerating, requiring agility and innovation from all players.

In conclusion, the retail real estate sector in 2024 will be characterized by the continued rise of wellness, the embrace of community-centric spaces, and the challenge of navigating a competitive market with limited supply. These trends highlight the ongoing transformation of the retail sector and the need for retailers and landlords to adapt to meet the evolving demands of consumers.