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Report: Rents are stabilizing, and retail expansion continues apace

Al Urbanski
whole foods small-NYC
A 9,000-sq. ft. Whole Foods in New York City.

In 2020, when COVID-19 swept the nation, new store openings dropped to 3,704, a 16% decline.

In 2021, when vaccines became available, openings topped the 5,000 mark and have continued rising every year since, according to Coresight Research.

Store closures, meanwhile, decreased significantly in 2021 and 2022, then increased greatly in the next two years. The 7,327 stores closed in 2024 surpassed 2022’s number by almost 50%.

The uptick in closures during the final quarter signals potential challenges ahead for retailers, according to a “State of the Market” report from Buxton, a location intelligence software provider employed by chains that include Uniqlo, RH, and Urban Outfitters.

“Economic pressures, including rising lease renewal costs and elevated bankruptcy rates, continued to affect profitability for retailers in vulnerable subindustries, driving closures,” said the report.

The rampant closures, however, have produced a silver lining, noted Buxton. The company sees great opportunities for expanding retailers due to the high levels of properties being vacated by brands such as Walgreens, Family Dollar, and Big Lots. Landlords are reimagining and refilling their centers with entertainment and food and beverage uses, making them more attractive to expanding, classic retail brands.

Retail rent growth, Buxton also reports, has stabilized. Rents grew at an annual rate of 3.4% in 2024, down from a peak of 5% in 2022.

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The report notes that nontraditional service retail brands have accounted for 15% of all leasing activity over the last two years, and a recent report from CoStar predicted that service tenants will account for 20% of all retail leasing activity in 2025.

Nearly all leading retail brands are introducing smaller store footprints to engage with customers in both urban and suburban locations. 

Mentioned in the report are Bloomingdale’s Bloomies stores, which range from 10,000 to 30,000 sq. ft. and Whole Foods Market’s Daily Shop, a compact concept between 7,000 and 14,000 sq. ft. Big-box mainstays Target and Meijer, too, are ranging out into mixed-use developments and college campuses with much small footprints.

Also new to both urban and suburban retail centers are direct-to-consumer brands that choose locations next to complementary tenants, leveraging their digital followings to drive in-store sales, Buxton noted. 

Chewy, an online supplier of pet supplies, has introduced Chewy Vet Care clinics in key markets alongside retail offerings, and Halara and Asteri Beauty are trading in their pop-ups for permanent locations. 

Buxton also mentioned the planned arrival of Netflix with its first retail-entertainment concept, Netflix House, which will offer themed attractions, merchandise, and dining in a large-format space.

The report advises expanding retail brands to place an intense focus on Gen Z shoppers, who now make up about 25% of the global population.

“This digitally native generation is entering its prime spending years, projected to wield $12 trillion in global spending power by 2030,” the report said. “Their unique preferences and behaviors are influencing where and how retailers invest in physical and digital spaces. 

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