- Retailers are adapting store formats to meet changing consumer habits, with a pivot toward smaller, more localized footprints in suburban markets.
- Health, convenience, and purpose are driving consumer preferences, reshaping what products are sold and where.
- AI and digitization are viewed as tools to enhance—not replace—retail operations, with 80% of retailers expected to adopt AI by 2025.
- Strategic flexibility is key, as landlords and retailers embrace adaptive reuse, hybrid models, and mixed-use concepts to stay resilient.
A Sector In Transition
Retail’s playbook is being rewritten, reports CBRE. At this year’s ICSC Las Vegas convention, CBRE surveyed more than 50 industry professionals—including retailers, landlords, and investors—revealing an industry rapidly pivoting in response to tighter margins, tech disruption, and shifting consumer priorities.
Shopping Behavior Reshaped
Retailers report a fundamental shift in shopping patterns. Hybrid work schedules and inflationary pressures are driving consumers to consolidate trips, seek wellness-focused products, and shop closer to home. This new behavior is fueling demand in residential-adjacent and suburban markets, especially for food and wellness retail.
Rightsizing And Rethinking Real Estate
Large flagship locations are giving way to flexible, high-efficiency formats. Smaller suburban stores, micro-locations, and hybrid use concepts are taking center stage. Secondary markets such as Tulsa and Cincinnati are seeing increased net absorption, signaling opportunity beyond traditional top-tier metros.
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Tech As An Enabler, Not A Threat
Retailers are leaning into technology, particularly AI, to streamline operations and enhance customer experience. Use cases range from personalized marketing and inventory forecasting to VIP tracking and real-time performance monitoring. As AI adoption becomes standard, thoughtful implementation is key to maintaining competitive advantage.
Agility Is The New Advantage
With persistent economic uncertainty and operational challenges, both landlords and tenants are embracing flexible strategies. Adaptive reuse, landlord-as-partner models, and mixed-use developments that combine retail, fitness, and F&B are becoming critical to resilience and profitability.
What’s Next
Retail real estate must continue evolving alongside the consumer. The path forward includes flexible, tech-enabled spaces in growth markets, particularly suburban areas with strong housing and economic fundamentals. For landlords, this means rethinking layouts, investing in infrastructure, and targeting secondary cities ripe for redevelopment.
Bottom Line
The future of retail real estate belongs to those who embrace change. From AI-powered operations to localized wellness offerings, success in this new era will depend on how well stakeholders can pivot, partner, and plan for what’s next.
