Retail Experience Wins Over Mid‑Tier Tenants
The retail market remains steady, with new openings balancing closures and keeping the vacancy rate under 5%. The third quarter showed positive net absorption, a rare uptick that signals modest growth.
Why the Overlooked Segment Matters
Owners are now hunting for better returns, and Cindy MacMillan, VP of asset management at Grosvenor, says the answer lies in the middle‑ground tenant. “Focusing on the retail experience is the best way for landlords to attract tenants and increase foot traffic,” she explains.
Historically, managers have chased either bargain shoppers or ultra‑luxury brands. That leaves the middle‑market largely ignored, even though it represents a sizable share of everyday spenders.
“In order to attract middle‑market customers, the landlord needs to establish sufficient scale,” MacMillan notes. “The tenants should offer compatible uses that really create an attractive destination for their specific customers.”
Considering the surrounding community is essential, especially for mixed‑use sites where residents live above or beside the shops. A venue that serves local needs first can become a neighborhood hub.
“Landlords need to get creative about ensuring that the retail really reflects the community who’s living above or in and around the retail that they’re providing,” she adds. “The right mix of tenants will help increase dwell time at the property, and that is really what you want.”
Designing a Seamless Visit
Physical locations now compete with online stores that operate 24/7. Eliminating friction points—such as hard‑to‑find parking, poor storefront visibility, and unsafe walkways—can make a real difference.
“It really needs to reflect the multiple‑channel experience,” MacMillan says. “It needs to be convenient for the customer.”
Related: Tech boom opens new industry frontier
Artificial intelligence is giving owners a clearer view of shopper habits. By analyzing cell‑phone signals and credit‑card data, AI can map travel times, foot traffic, dwell periods, and performance of existing lessees.
“Once you’ve got that data, you can use AI to run scenarios. Based on performance in existing centers, you can run scenarios to optimize your merchandising plan and put certain co‑tenancies together that are complementary and would drive sales up for both of those retailers,” she explains.
In practice, this means shoppers could see more coherent store groupings—like a coffee shop next to a bookstore—making each stop feel purposeful. When the layout mirrors daily routines, visitors are likely to linger longer and spend more.
Improving signage, both physical and digital, helps brands stand out in a crowded corridor. Simple upgrades such as clearer wayfinding and brighter lighting can turn a routine trip into a pleasant outing.
Even modest changes, like adding bike racks, help.
Redesigning entryways can boost the appeal of a venue that otherwise struggles against click‑and‑collect services.
As owners adopt analytics, the trend points toward more data‑driven tenant curation, aiming to keep brick‑and‑mortar relevant in an increasingly digital shopping world.
