{"id":1004783975,"date":"2025-01-21T02:19:00","date_gmt":"2025-01-21T10:19:00","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004783975"},"modified":"2026-01-29T02:29:24","modified_gmt":"2026-01-29T10:29:24","slug":"whats-in-store-for-retail-in-2025","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/whats-in-store-for-retail-in-2025\/","title":{"rendered":"What\u2019s in Store for Retail in 2025?"},"content":{"rendered":"\n

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\"Kroger's<\/a>
Owned and operated by Phillips Edison & Co., the Kroger-anchored Mansell Village shopping center in Roswell, Ga., provides retail space for lease at a high-traffic intersection north of Atlanta. Image courtesy of Phillips Edison & Co.<\/em>



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The retail sector is set for yet another year of transformation as it continues to adapt to shifting consumer preferences, economic headwinds and technological innovations.<\/p>\n\n\n\n

One of the key trends that will define the sector this year is the steady focus on necessity-based retail, with grocery-anchored shopping centers demonstrating resilience in meeting the demands of evolving demographics. Migration to suburban areas, combined with the influence of hybrid work, are altering retail patterns and driving increased demand for proximity-based and convenience-oriented shopping experiences.<\/p>\n\n\n\n

Additionally, with high construction costs<\/a> and limited new development over the past decade, there will be increased pressure on supply, with competition for existing retail spaces<\/a> bound to further intensify.<\/p>\n\n\n\n

\u201cThere has been very little development activity to build new shopping centers over the last 10 years, which is constricting the supply of suburban neighborhood retail locations,” Jeff Edison, chairman & CEO of Phillips Edison & Co., told Commercial Property Executive<\/em>. “If current trends continue, it will be seven to 10 years before retail construction returns in a meaningful way.”<\/p>\n\n\n\n

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READ ALSO:<\/strong> Retail Space in Focus: What\u2019s Driving the Sector\u2019s Growth?<\/a><\/p>\n\n\n\n

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As a result, retailers and commercial real estate stakeholders are turning to innovative, community-focused strategies to remain competitive in 2025.<\/p>\n\n\n\n

Necessity-based retail still strong<\/h2>\n\n\n\n

The retail sector experienced multiple shifts in 2024, with both retailers and landlords having to make adjustments, but grocery-anchored retail emerged as a cornerstone of stability amidst broader fluctuations. Edison is confident in the continued strength of these centers. Their resilience is bolstered by consistent foot traffic from consumers who visit grocery stores an average of 1.6 times per week.<\/p>\n\n\n\n

Grocery stores play an important role in omni-channel retail and in last-mile delivery. The proximity of grocery-anchored centers to end consumers are also drawing in smaller retailers and local businesses that benefit from the consistent foot traffic. These centers demonstrated their value over the past few years as inflationary pressures drove consumers to seek cost-efficient shopping options closer to home. <\/p>\n\n\n

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\"Shoppes<\/a>
Shoppes at Avalon in Spring Hill, Fla., is a Publix-anchored shopping center in the Tampa metro area, owned and leased by Phillips Edison & Co. The 63,000-square-foot center is in a high-traffic location on County Line Road. Image courtesy of Phillips Edison & Co.<\/em><\/figcaption><\/figure><\/div>\n\n\n

“It\u2019s vital that property owners ensure that centers are well-merchandised and tailored to the needs and demands of the surrounding community,” Edison said. “We call this being locally smart. We look at every center as its own business, merchandising our centers to the neighborhoods in which they are situated.”<\/p>\n\n\n\n

Among some of the most popular spaces in grocery-anchored centers are quick-service restaurants, health and beauty, and medtail. These sectors cater to consumers\u2019 increasing demand for convenience and necessity-based goods and services across the country. <\/p>\n\n\n\n

However, migration to suburban areas and particularly the Sun Belt region<\/a> influenced retail\u2019s geographic focus, according to Damon Juha, vice chair of Saul Ewing\u2019s real estate practice. Retailers adjusted their footprints to align with this pattern, with demand particularly high for suburban centers that attract hybrid workers with flexible schedules and drive recurring foot traffic that benefits smaller retailers within the centers.<\/p>\n\n\n\n

But the scarcity of available retail space, combined with continued supply chain disruptions and inflation have definitely put a lot of pressure on the sector. Nevertheless, store closures\u2014while disruptive\u2014allowed landlords to reconfigure tenant mixes, often driving up rents and refreshing the shopping experience, said James Breeze, vice president of Global Industrial and Retail Research at CBRE.<\/p>\n\n\n\n

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READ ALSO: <\/strong>How Geopolitics Will Shape CRE Investment in 2025<\/a><\/p>\n\n\n\n

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“The industry also responded with improved logistics and inventory management strategies, and many retailers invested in technology to streamline operations,” Breeze noted.<\/p>\n\n\n\n

Going forward, a stabilization in rental rates is expected, according to Scott Sherman, founder & principal of Torose Equities. This normalization follows the exceptional growth seen in the immediate post-pandemic years and signals a recalibration within the sector.<\/p>\n\n\n\n