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Americans are shopping in smaller, more personalized stores. According to CoStar Group, the average retail lease shrank to 3,200 square feet in 2023, the smallest since data collection began in 2006. Kate King reports in The Wall Street Journal:
The average store size in the U.S. is the smallest it’s been in at least 17 years, reflecting profound changes in the way Americans now shop.
The rise in e-commerce and a growing distaste for giant emporiums are softening demand for department stores and other big-box space. Restaurants and coffee shops, meanwhile, are gobbling up small storefronts as Americans spend more time dining out, ordering at drive-throughs or using food-delivery apps.
The end result: Retailers signed leases averaging 3,200 square feet during the first three quarters of 2023, the smallest size since data firm
began tracking this metric in 2006.
“A shopping center today looks very different than it did 10 years ago,” said Brandon Svec, CoStar’s national director of U.S. retail analytics. “The focus is much more on experience, much more on food and beverage.”
Food and beverage companies signed nearly one-fifth of all retail leases this year, according to CoStar, with most targeting spaces 5,000-square-feet or smaller.
Despite these changes in retail’s landscape, overall demand for store space is robust. Nationwide, the rate of available retail space was 4.8% in the third quarter, the lowest level in the 18 years the data has been tracked by real-estate-services firm.
Rather than filling sprawling department stores with an array of merchandise, many retailers have started using data from online orders, social-media and foot-traffic analytics to customize smaller inventories to the local population. They have also bolstered store infrastructure to make it easier for customers to pick up and return items bought online.
This allows them to keep fewer items in stores and shrink their footprints to fit into the open-air shopping centers where customers are increasingly shopping.
Read more here.
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