Shopping Center Owners Win as Big Box Retailers Scale Down

Posted on February 12, 2019

Many big-box retailers, including Walmart, Target, Nordstrom and Kohls, are following their online competitors to establish small footprint brick-and-mortar stores in more locations that reach consumers in dense urban areas.

By downsizing inventory in these locations, retailers are able to reduce their real estate footprints and open more mini stores where customers live and work in high-traffic, often high-rent areas. Retailers adapting this strategy are able to generate significant sales when they narrow their focus on products and offerings that meet the needs of local shoppers and combine it with the convenience of delivery services. For example, Ikea is opening a 17,500 square showroom in New York City, its first on the Island, which is significantly scaled down from its average store size of 300,000 square feet, while Aldi’s grocers are subleasing space from Kohl’s stores, which has partnered with Amazon to sell and accept returns from the online superstore.

The good news for commercial real estate owners and investors is that this personalization and localization of multi-channel shopping experiences means more opportunities to attract stable tenants, maintain occupancy, improve foot traffic and increase the value of their properties.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.