Facing shifting consumer behavior, the retail sector is seeing competition for prime locations in urban and suburban hubs, and rents remain elevated, according to Q1 reports from several investment firms. The rise of e-commerce and inflation mean that shoppers today prioritize their buying activity around essentials like groceries and health-related services, and they prefer open-air centers for easy online pickups and returns.
CBRE’s 2025 Retail Rent Dynamics report says high-street retail remains the most expensive among all retail formats, with Los Angeles and Miami standing out as the priciest. Rents are also on the rise in dense suburban corridors and live-work-play (LWP) districts due to their convenience and walkability.
Cushman & Wakefield reports that as retail space costs rise in thriving cities, the next opportunity for commercial investors may live in suburban Class B space (think underutilized, 1980s-era indoor malls), which can be repurposed into mixed-use residential and lifestyle properties that attract younger residents.
Foot traffic is down in older malls. While Class A malls are only 4% below pre-2019 levels and at 95% occupancy, Class B mall foot traffic is down 9% with occupancy of about 89%. Occupancy at C-rated malls is below 72%. There are 250 Class B malls in the United States, comprising about 28% of total mall space, according to Green Street analytics.
“Reimagining these spaces not only allows investors and developers to achieve significant returns, but also fosters positive economic growth in local communities,” Cushman & Wakefield’s report says.
Shoppers are seeking high-density, service-oriented retail that matches the daily patterns of hybrid and remote work. LWP districts that blend residential, office and entertainment uses—gyms, salons and spas, groceries, apartments and restaurants, plus green spaces—are outperforming both high-street retail and broader mixed-use areas, according to Cushman & Wakefield. The highest LWP district rents, as of Q1, are in New York at $91.40 per square foot, followed by Boston at $47.33 and Washington, D.C., at $46.21.
Cushman & Wakefield, which is tracking 50 mall redevelopments, cites Hawthorn Mall in Vernon Hills, Ill., as one example of a retail overhaul. The traditional Chicago suburban mall, still anchored by Macy’s and JC Penny department stores, is evolving into a mixed-use community with the addition of Hawthorn Row, a walkable outdoor corridor of luxury residential, retail and dining next to the original indoor structure. The ownership team of Centennial, Focus and Atlantic Residential managed the Hawthorn Phase II site redevelopment plan.