What’s Happening to Vacant Retail Spaces?
At the beginning of September 2020, retail space vacancy rates hit a historic high of 9.8%, which is largely fueled by Covid-19 shutdowns and safety concerns across the nation. The demand for commercial retail space has been slowly decreasing over the past few years as retail transitions to digital, but now with Covid-19, there is a surplus of availability without enough customers to lease out this vacant space.
In response to this change in demand, mall operators are forced to roll up their sleeves and focus on actively finding new tenants, and developers are beginning to repurpose mall space for a number of businesses, including schools, doctor’s offices, long term storage facilities, and even residential housing. While some businesses are feeling the impact of reduced physical retail space, large direct to consumer sellers such as Amazon are racing to secure vacant mall spaces in proximity to urban areas and adjacent neighborhoods to meet the increasing demand of online order deliveries.
Currently, Amazon is aiming to convert several former JC Penny and Sears department store locations in micro-fulfillment warehouses, strategically located close to urban communities which will allow orders to be delivered quicker and at lower shipping costs. Some retail business owners speculate that the introduction of micro-fulfillment centers in conventional mall spaces will increase the rent for struggling businesses, yet many property managers are even negotiating discounted rates to find long-term tenants that can reliably cover overhead costs.
Amazon recently reported that it doubled its net profit to $5.2 billion in its 2020 Q2 earnings statement, which indicates that the ecommerce giant is not going anywhere. The future of vacant mall space may seem uncertain as many businesses and consumers alike are cautious about the upcoming holiday shopping season, however the bigger picture of retail is much brighter than it may appear. Overall, Amazon retail sales still only account for roughly 5% of all retail spend across the country, which goes to show that no single force is dominating the entire retail marketplace.
With the new changes in physical retail and online ecommerce, it’s more important than ever to establish a sound marketing plan and take advantage of an omni-channel advertising strategy to reach new customers. At River Direct, we offer a number of performance driven marketing solutions to help your retail business grow through linear television, Amazon listings, over-the-top/connected-tv, and social media marketing.
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