The retail landscape continues its profound, enduring transformation in response to evolving consumer behavior. This shift encompasses not only the evolving roster of tenants leasing retail space but also the evolving manner in which various tenant categories utilize their spaces.
There has been a rapid expansion among retailers that traditionally occupy smaller spaces, such as service-oriented and food and beverage-based businesses. Conversely, retailers known for larger store footprints, like those in apparel and general merchandise, are reconfiguring their space usage, resulting in a reduction of their store sizes.
This trend has culminated in an escalated demand for more compact and efficient spaces. Consequently, during the initial three quarters of 2023, the average size of newly executed retail leases plummeted to a historic low of just 3,200 square feet.
In the first nine months of the year, retail tenants collectively leased 191 million square feet of space, marking a decline of approximately 9% compared to the same period last year. This figure is expected to increase as deals completed towards the end of the third quarter are fully documented.
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