Big box retailers and national chains are experiencing dwindling customer counts to their stores. At the same time, a wave of small businesses are rising up to take their place. On the ground, entrepreneurs across the country are taking advantage of new retail spaces freed up by the change that were previously cost prohibitive or out of reach. With landlords showing increased willingness to negotiate manageable lease terms, many local business owners are finding opportunities to thrive in what was previously considered a challenging commercial real estate market.
Andrew Spatz, former chief small business advocate for the state of Washington. He concludes by reiterating that smart lease terms are key to encouraging their development. He emphasized that small businesses do well when landlords provide reasonable leases. He spoke to the importance of whittling down on ‘triple net’ leases, which frequently burden tenants with added expenses. These positive circumstances have created numerous opportunities for budding entrepreneurs looking to carve out a niche in their local communities.
Marc Norman, a retail expert, explained that several variables determine whether a non-traditional business can successfully secure a location previously occupied by a pricey chain. He pointed out that many shopping centers prioritize attracting “credit tenants,” generally established chains capable of paying six months’ rent upfront on long-term leases.
“Empty space sends a message that a place is struggling,” Norman remarked, highlighting the impact of vacant storefronts on consumer perception. He further stressed the importance of occupied spaces, saying, “Consumers visiting these places want to see occupied spaces. We don’t want to walk by 15 empty spaces and see one or two occupied spaces.”
Additional changes to the business landscape long seen by foot traffic monitor Elizabeth Lafontaine, that impacted neighborhood retail outlets. She underscored the wave of new small businesses as an indication shift consumer behavior is coming. Consumers are more interested than ever in experiences that are less easily created by traditional retail formats.
For example, in northern Michigan, Andy LaPointe keeps two retail businesses in strip mall suburbs. He then offered thoughts and suggestions for how these smaller venues should begin to think about better serving their local communities. “What we’ve found is when national brands pull out of prime spots, it’s less about simply filling those spaces. It is about reimagining it as an experience and destination that reflects the local community,” he explained.
Teresha Aird has seen an amazing surge of small businesses capitalizing on these new opportunities. Now, they’re further accessing vacancies in markets that previously had been too pricey for their models. “That’s opened the door for independent retailers, fitness operators, and – in particular – service-based businesses, who were previously priced out,” she said.
Glenn Brill pointed out that local businesses can drill down on opportunities at more localized levels such as smaller strip centers. These sites typically offer much more predictable pedestrian traffic than cavernous, vacant big box stores. “The lifespan of more than 50% of small businesses is less than six years,” he cautioned, underscoring the challenges entrepreneurs face despite the opportunities arising from shifting retail dynamics.
Jacob Naig from Maryland echoed this sentiment and recounted his success in negotiating amenable and favorable terms of leases for his clientele. “Landlords in my area generally don’t want space to sit empty, which opens up opportunities for smaller businesses,” he noted. Together, he gets great monthly rent and negotiates flexible lease terms to boot. This skill has been the secret sauce for his clients looking to break into crowded or hostile markets.
The new retail reality makes today a more favorable environment for entrepreneurs. Aird highlighted the significance of this change: “That kind of access wasn’t on the table for startups and small businesses three years ago in most metro areas. Now it is, and they’re making the most of it to test physical presence without overextending capital.”
LaPointe focused on the local impacts that successful small businesses make with their unique offerings that serve their local community. These spaces already have a site selection review, active foot traffic, and locals are accustomed to seeing activity in the space. That’s when the magic happens when a small business can provide a really distinct experience. It makes an inviting environment that people want to stay in and feel connected to.
The mom and pop joints are flourishing in parts of town where Walmart used to rule. Together, they’re re-shaping the retail landscape and creating new, deeper ties within their community. Independent businesses are booming, leading to a more vibrant and diverse storefront commercial scene. This development boom gives residents the opportunity to engage with their neighborhoods in new, dynamic ways.