CoStar: Service-based brands will be biggest leasers of real estate space in 2025
For the first time, service-based retailers are now the most active acquirers of retail real estate space, according to CoStar.
In its January topline summary, the commercial real estate analytics platform reported that foodservice tenants accounted for more than 20% of leasing activity during the first 11 months of 2024.
During the same period, fitness brands snapped up 12% of leases, and health care and education tenants grabbed 6%.
“During the pandemic, restaurants didn’t shut down. They moved into takeout kitchens, and delivery apps kept them in business,” said Brandon Svec, CoStar’s national director of retail analytics. “When they opened back up, eating out became the logical way for people to get out and spend their money. People looked to it as an affordable luxury after being locked in their houses."
CoStar also reported that demographics have played a role in the rise of service-based businesses. Marriage and birth rates in the United States have plummeted over the past couple of decades. According to Statista, the marriage rate in 1990 was 9.8 per 1,000 people. By 2022, that number had plummeted to 6.2 per thousand.
In 2004, the birth rate was around 14 births per 1,000 people. Twenty years later, that number fell to just 11. What’s more, birth rates are highly affected by income levels. In 2021, the birth rate for families with an income of under $10,000 was 62 births per 1,000 women. The birth rate for families with an income of $200,000 or more — the ones most likely to dine out — was 47.
Younger consumers have more money to spend and are also spending it on doggy day care, car washes, and fitness club memberships.
Tenants at neighborhood centers long shunned gyms, whose members took up lots of parking spaces but spent little time or money at the stores in the properties. That’s changed, said Svec.
“Fitness brands are a fantastic driver of traffic to a center. They’re not the stepchild any longer, they’re the stars of the show,” Svec said. “The TikTok generation are active members of fitness centers. They’ve become part of their personal brands.”
