ATLANTA, GEORGIA (January 18, 2023) - A story featured in Bizjournals spotlighted how despite lingering uncertainty in the economy, some retailers are preparing to roll out robust expansion plans in 2023 and subsequent years.
An analysis by Northmarq was referenced which found, among several retail categories, which tenants have plans to expand in the coming years. Most identified retailers expect to add dozens of new locations in 2023 and later, but companies with more aggressive growth plans anticipate opening hundreds or even thousands of storefronts in the next several years.
Mike Sladich, managing director at Northmarq, said certain categories of retail, such as convenience stores and dollar stores, tend to have aggressive growth plans in any given year.
But many retailers that are planning to grow in the coming years may find vacancy to be tighter in years past, as new retail development has slowed dramatically in the past decade and much of the existing retail space has been redeveloped to other uses.
"No one is really building large shopping centers," Sladich said. "Malls are being repurposed. It feels like everything wants to be live-work-play. We're seeing a huge ramp-up as retailers need their own prototype … that’s where you've seen the low vacancy because no one is building those spaces."
It's gotten pretty expensive to develop a new site for, say, a new convenience store, which may mean some pushback on rental rates so developers can achieve the pricing they require," Sladich said.
With less vacant retail space sitting on the market, that could present new challenges for companies accustomed to backfilling that space.
"There will have to be some kind of intersection to make those deals pencil," he continued. "There are not as many sites to backfill, which was something Dollar Tree used to do."