“Tenant Mixes in 2020 differ from Anything Consumers have seen since The Dawn of the American Downtown.” Landlords are discovering and reaping the benefits of backfilling former vacant retail spaces by way of some recent closures, leading to higher returns and a more powerful overall diversified tenant roster. By way of examples include, RPAI filling a former Pier 1 store with a Trader Joes at Shoppes at Union Hill as well as the replacement of a J.Crew store with Lululemon at Main Street Promenade, equating to a positive double digit spread. Brixmor has replaced approx. 60% of its vacant Dressbarn locations with tenants such as a Pet Supplies Plus and Five Below.
Retail is strong and is constantly morphing and evolving to a new age consumer to meet their demands. Health care tenants continue to eat up retail space, driven by the urgent-care industry’s growth from 6,400 clinics at year-end 2014 to 9,300 by mid-2019, according to the Urgent Care Association. Pop-ups have evolved from one-offs to perennial space-fillers. New York City–based co-working company Industrious, which teams up with such retail landlords as Macerich, ShopCore Properties and Taubman Centers to create flexible working space, will be rolling out about 40 sites this year. Growing wellness chains like Massage Envy and Orangetheory Fitness offer Internet-Proof businesses and require less parking and finish-out than large fitness chains. They also tend to attract smoothie and vitamin shops and similar health-related tenants. Such larger-scale workout chains as Gold’s Gym, Equinox Fitness, LA Fitness, LifeTime Fitness and 24 Hour Fitness also are filling significant open-air space. Entertainment tenants like Altitude Trampoline Park, Dave & Buster’s, Lego, Round One and Sky Zone are filling up big portions of their own. Power centers also are parceling off long-dormant pad sites to fast-casual restaurants, phone stores and medical tenants. Strength in demand from health, fitness, medical, service businesses and off-price retailers remain the core for growth in the shopping center industry.