Recent findings show that street retail districts are demonstrating robust recovery, signaling a return to pre-pandemic vitality. Projections suggest that foot traffic across key trade areas will achieve full pre-pandemic restoration by Q3 2024, surpassing previous levels by 2025. Notably, by Q4 2023, foot traffic in prominent trade zones tracked by Placer.ai had rebounded to 81% of 2019 levels, showcasing a resilient comeback.
Amid this recovery, retailers have navigated shifting market dynamics adeptly, capitalizing on reduced rental costs during the pandemic to expand their footprint. This strategic maneuver has now positioned investors favorably, with prime trade areas witnessing a marked rental increase—up by 9% in the Americas and 5.8% globally since 2021.
Laura Barr, Americas Retail Leader at CBRE, highlighted retailers’ evolving challenges in securing coveted spaces amidst dwindling availability and escalating rents. She noted, “Market conditions are prompting innovative approaches from retailers and investors alike to meet growth targets despite spatial constraints.”
With prime locations becoming scarce, retailers are adopting a strategic shift by exploring multiple storefronts across alternative street-retail districts. These areas, with their lower rents and fewer regulatory barriers, are fostering a strategy of clustering locations. This approach not only enhances synergy and expands brands but also streamlines customer convenience, particularly for digital services like pickups and returns.
The strategic importance of physical retail persists in an omnichannel landscape where digital influences nearly 70% of retail transactions. Forrester’s insights reveal that in-store sales fueled 78% of retail growth in 2022, a notable surge from 46% in 2019. Furthermore, the International Council of Shopping Centers (ICSC) underscores the pivotal role of physical stores, estimating a nearly 7% increase in digital sales following a store opening, juxtaposed with an 11.5% decline upon closure.
Contrary to earlier predictions of e-commerce dominance, the symbiotic relationship between online and physical retail is becoming increasingly clear. This mutual dependence is driving the demand for expansive physical footprints, underscoring the enduring relevance of brick-and-mortar establishments in today’s retail ecosystem.
As street retail districts regain momentum, stakeholders are navigating a landscape reshaped by pandemic-driven shifts. With resilience and strategic foresight, retailers and investors are poised to capitalize on evolving consumer behaviors, driving forward a dynamic era of retail resurgence and innovation.
