Retail commercial real estate is adapting rather than declining. While the pandemic changed consumer behavior, office attendance, and shopping patterns, the sector continues to show resilience, with stronger suburban retail performance, experiential retail growth, and increased demand for technology-driven leasing. This article explores the latest retail real estate trends, growth opportunities, and why commercial real estate technology is becoming essential to attracting and retaining quality tenants.
Store closures. Bankruptcies. Record store openings.
Depending on what you read, the retail commercial real estate market is either struggling or making a strong comeback.
With so many different headlines, it can be difficult to understand what's really happening. Some reports focus on store closures, while others highlight record leasing activity and strong occupancy rates.
The truth lies somewhere in the middle.
Today's retail market is changing, not disappearing. Success now depends on understanding shifting consumer behavior, identifying new opportunities, and using better data to make smarter leasing decisions.
In this article, we'll explore the current state of retail commercial real estate, examine the trends shaping retail leasing, and explain why commercial real estate technology has become an important tool for long-term success.
The Changing Landscape of Retail Commercial Real Estate
The past few years have been unlike anything the retail industry has experienced before.
The pandemic changed where people live, work, and shop. These changes continue to influence retail property management, leasing strategies, and investment decisions today.
When COVID-19 arrived in early 2020, commercial real estate changed almost overnight.
Millions of employees began working from home, while many families, technology workers, and recent graduates moved away from city centers into suburban communities.
Major cities across the United States experienced significant population declines as remote work became common.
As fewer people commuted into downtown business districts, many retailers lost a large share of their daily customer traffic.
According to a recent VODI report, office demand remains 48% below pre-pandemic levels seen in 2018 and 2019. That decline has affected many industries, especially retail commercial real estate.
How Has Consumer Behavior Changed Since the Pandemic?
As office attendance declined, shopping habits also changed.
Instead of shopping near their workplaces, consumers increasingly began shopping closer to home.
Across the United States, downtown foot traffic remains approximately 25% lower than pre-pandemic levels.
Many well-known retailers, including Bed Bath & Beyond and Party City, closed stores, creating headlines that suggested retail was in long-term decline.
However, those headlines tell only part of the story.
Rather than collapsing, the retail industry has been adapting to new consumer habits and changing demand.
Retail activity has shifted toward locations that better match where people now live, work, and spend their time.
Why Retail Leasing Is Showing Signs of Growth
The retail sector has faced major challenges over the past several years, but it has also shown remarkable resilience.
Instead of standing still, many retailers adjusted their portfolio strategies to better serve changing consumer behavior.
Why Suburban Retail Markets Are Growing
As more people relocated to suburban communities, retailers responded by relocating many of their stores as well.
Many businesses reduced their presence in urban markets while expanding into neighborhoods where customers now spend more of their time.
So far, those decisions have produced encouraging results.
Retail companies including Site Centers, Phillips Edison, and Retail Opportunity Investments Corp reported positive occupancy rates and leasing performance throughout 2023.
While online shopping remains an important part of retail, physical stores continue to play a major role.
Today, approximately 70% of retail purchases still take place inside brick-and-mortar stores.
This demonstrates that physical retail remains an essential part of the customer experience.
Despite concerns surrounding inflation, rising interest rates, and economic uncertainty, consumers have continued spending.
According to the National Retail Federation, retail sales growth during 2023 was projected between 4% and 6%, exceeding the pre-pandemic average growth rate of approximately 3.6%.
These numbers suggest that retail commercial real estate continues to create opportunities for owners, investors, and leasing teams.
"Retail has been flourishing in the post-pandemic environment as we continue to experience healthy growth in traffic, sales, and bottom-line NOI across our portfolio relative to 2019. Elevated leasing activity and the return of the consumer to the physical store has resulted in historically low levels of vacancy which is spurring rent growth in the sector. These trends are magnified in the best quality centers, particularly those within suburban markets that have been beneficiaries of a consumer that is spending more dollars closer to home."
— Adria Savarese, Managing Director, Real Estate Americas, JP Morgan Asset Management
The strength of individual markets will continue to vary based on location, demographics, and local economic conditions.
However, one thing has become increasingly clear.
Retail today looks very different than it did before 2020, and many of those changes are creating new opportunities rather than new obstacles.
The Rise of Experiential Retail and Omnichannel Shopping
Consumer expectations continue to evolve alongside technology.
Today's shoppers expect more than simply purchasing products.
They want engaging experiences that combine physical stores with digital interactions.
This shift has accelerated the growth of experiential retail, sometimes referred to as "retailtainment."
Retailers are investing in immersive shopping experiences through virtual reality, interactive displays, social media engagement, pop-up stores, and omnichannel strategies that connect online and in-store shopping.
As customer expectations continue to change, retail property owners and operators must also adapt.
Providing attractive retail spaces is no longer enough.
Owners must also support tenants with digital marketing, data-driven leasing, and technology that helps them better understand customer behavior.
These investments can strengthen tenant engagement while making retail centers more competitive in today's evolving market.
The Role of Commercial Real Estate Technology in Retail Success
The retail market continues to evolve, and with every shift comes new opportunities for owners and operators who are ready to adapt.
As we've seen, change isn't always easy. However, today's retail landscape offers many positive signs for those who know where to look. Consumer behavior is changing, new high-performing tenants are entering the market, and leasing teams must be ready to respond quickly.
This is where commercial real estate technology has become a competitive advantage.
Gone are the days when property owners could rely only on traditional leasing methods. Managing assets without a digital presence, marketing tools, or the ability to track tenant engagement makes it much harder to compete in today's market.
Using Technology to Improve Tenant Engagement
Retail leasing is no longer just about filling vacant space. It's about connecting with the right tenants and building long-term relationships that benefit the entire shopping center.
In the retail sector, securing creditworthy tenants remains important, but attracting tenants that fit your property's location, customer base, and long-term strategy is just as critical.
Being able to track tenant engagement with your marketing materials helps leasing teams identify qualified prospects and focus on opportunities that are more likely to convert into successful leases.
With better visibility into tenant activity, owners can make faster and more informed leasing decisions.
Managing Retail Leasing More Efficiently
Technology also helps simplify the leasing process from the first interaction through tenant move-in.
Instead of relying on disconnected systems and manual processes, leasing teams can work more efficiently by managing everything in one place.
This includes:
- Creating Letters of Intent (LOIs) faster.
- Streamlining deal approvals.
- Coordinating tenant move-in activities.
- Managing leasing workflows more efficiently.
- Improving collaboration across leasing and marketing teams.
Reducing administrative work gives teams more time to focus on building relationships and delivering better tenant experiences.
Why Real-Time Portfolio Insights Matter
Retail markets continue to change quickly.
Having access to real-time portfolio insights allows owners and operators to respond faster to new opportunities while strengthening relationships with existing tenants.
Understanding portfolio-wide performance, monitoring tenant activity, and identifying growth opportunities all become easier when information is centralized.
As highlighted throughout this article, technology is no longer simply a helpful addition; it has become an essential part of modern retail property management.
With VTS, leasing and marketing teams can manage tenant engagement, monitor portfolio performance, and support the entire leasing journey from initial interest through lease renewal.
The Future of Retail Commercial Real Estate
Retail commercial real estate has demonstrated remarkable resilience over the past several years.
Although the market looks different than it did before 2020, those changes have created new opportunities for retailers, investors, and property owners willing to adapt.
Consumer expectations continue to evolve, suburban retail markets remain strong, and experiential retail is creating new ways for brands to connect with shoppers.
Success in the years ahead will depend on understanding these changes and using technology to make smarter leasing decisions.
The retail industry has bounced back, and to continue attracting investors and high-quality tenants, leasing and marketing teams need to work together from the earliest stages of tenant interest through move-in and long-term retention.
Looking Ahead with Confidence
While it's important to remain cautious in an evolving market, there's also good reason for optimism.
Retail commercial real estate has shown that it can adapt to changing economic conditions, shifting consumer preferences, and new ways of working.
Today's opportunities look different from those of the past, but they are opportunities nonetheless.
Staying ahead requires access to reliable, real-time data that helps owners understand tenant engagement from the first interaction to lease renewal.
Technology is no longer optional; it's becoming a necessity for organizations that want to remain competitive in modern retail leasing.
To learn how these digital strategies can help improve your leasing operations, portfolio management, and tenant engagement, reach out to the VTS team to discover how technology can support your retail commercial real estate goals.
Frequently Asked Questions
Is retail commercial real estate recovering after the pandemic?
Yes. While the pandemic changed shopping patterns and office attendance, many retail markets have recovered through stronger suburban demand, healthy leasing activity, and continued consumer spending.
What trends are shaping the future of retail leasing?
Key trends include suburban retail growth, experiential retail, omnichannel shopping, digital leasing tools, and increased use of commercial real estate technology.
Why are suburban retail centers performing well?
As more people live and work closer to home, retailers have expanded into suburban markets where customer traffic and local spending have remained strong.
How does commercial real estate technology improve retail leasing?
Technology helps owners track tenant engagement, streamline leasing workflows, monitor portfolio performance, and make faster, data-driven leasing decisions.
What is experiential retail, and why is it becoming more popular?
Experiential retail focuses on creating engaging shopping experiences through interactive stores, events, digital technology, and omnichannel experiences that encourage customers to visit physical locations.
How can retail property owners attract and retain high-quality tenants?
Owners can improve tenant attraction and retention by understanding local market trends, using real-time leasing data, strengthening tenant engagement, and providing efficient, technology-supported leasing experiences.
Key Takeaways: Retail Success Comes from Adapting to Change
The retail commercial real estate market is not disappearing; it's evolving. While remote work, changing consumer behavior, and economic uncertainty have reshaped the industry, they have also created new growth opportunities.
Retailers are finding success by expanding into suburban markets, embracing experiential retail, and meeting customers wherever they choose to shop. At the same time, property owners are using commercial real estate technology to improve tenant engagement, simplify retail leasing, and make better portfolio decisions.
Organizations that combine market insights with the right digital tools will be better positioned to attract quality tenants, improve occupancy, and support long-term growth.
Ready to strengthen your retail leasing strategy? Discover how VTS helps leasing and marketing teams improve tenant engagement, streamline leasing operations, and make data-driven decisions across every retail property.
