Multi-tenant retail in California is one of the most difficult markets to navigate for owners due to the significantly different strategies and prevalence of empty big box space. In the state’s large coastal communities, most of today’s approaches involve long timelines, and value-add plays require creativity. In some of the Central Valley and smaller markets, where land costs are not as prohibitive, the future of shopping centers looks more like the past, but these markets are also changing. Owners of shopping centers across the state will need to evolve to meet consumer demand and combat the threat from technology.
“The two most commonly cited challenges facing retail, including shopping centers, are technology and an increase in dark big box space. Although they act as impediments to traditional investment strategies, creative operators can take advantage of the changing market. It should be noted that these trends are unlikely to disappear in the near future, so investment strategies need to account for additional closures and advancements in technology. As a result, traditional investment will diverge into experience-based and hyper convenience, while value-add will require redefining shopping centers.