Outdoor shopping centers are hot, even in the cold
Published in Home and Consumer News
Strip malls and other outdoor shopping centers throughout the Twin Cities suburbs are busier than ever.
Demand from retailers has driven nationwide shopping center occupancy to its highest level since 2007, when commercial real estate firm Cushman & Wakefield first started collecting the retail data.
Local real estate brokers and property managers say it has been hard for tenants to find space at outdoor shopping areas, especially in first- and second-ring suburbs but also in outstate Minnesota as brick-and-mortar retail has experienced a resurgence.
With a possible slowdown or recession on the horizon this year, Twin Cities real estate professionals still say they believe outdoor shopping centers — from small strip malls to power centers with large anchor stores — will remain strong especially as space continues to be limited.
"After the last three years of devastation, things took a while to creep back up, but I think that (rents) are coming back to normal. … I think the suburbs are healthy," said Kris Schisel, vice president of retail services for real estate company Transwestern.
Schisel along with several other retailer and landlord representatives spoke at a well-attended panel held by the Minnesota Shopping Center Association (MSCA) at the Oak Ridge Country Club in Hopkins this week.
Open-air shopping centers were a popular alternative to inside shopping malls for many consumers concerned about COVID-19. Contactless purchasing options like store pick-up, drive-up, and drive-through also helped make shopping at strip centers more convenient.
Many of these trends have continued even as COVID precautions have receded and more people have returned to in-store shopping, said Emilee DeCoteau, general manager of Woodbury Lakes and Centennial Shops and president of the MSCA.
DeCoteau has welcomed several new tenants over the last year to Woodbury Lakes including activewear store Offline by Aerie, modular furniture provider Lovesac, Hazelwood Food and Drink and the By the Yard outdoor furniture store. The shopping center appears to be mostly occupied.
The national vacancy rate for outdoor shopping centers was a little less than 6% at the end of last year with the Minneapolis area having a tighter market with an under 5% vacancy, according to a report released in January by Cushman & Wakefield. Last year store openings across the country outpaced closures by nearly 2,500. National asking rents have also gradually increased over the last year.
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