Open-Air Retail Complexes Enjoy New Hype

A picture of an urban outdoor shopping mall with shoppers walking among the stores.

© ZenShui/Alix Minde - PhotoAlto Agency RF Collections / Getty Images

Open-air shopping centers have become a shining star in the commercial sector since the pandemic began, thanks to curbside pickup, grocery stores, and shifts to suburban shopping, The Wall Street Journal reports. During the third quarter, property owners occupied 17 million square feet of open-air shopping centers—a nearly 50% jump from 2019 and a 10-year high for net absorption, according to recent CBRE data.

These large shopping centers that do not have a common indoor space are often anchored by grocery stores, another big winner in commercial real estate during the pandemic. Grocery-anchored retail attracted $5 billion in investment activity in the last quarter, according to CBRE.

Open-air retail centers and strip malls also may be experiencing an increase due to a migration to the suburbs. Also, as remote work grows, more people in the suburbs are shopping during the workweek.

Meanwhile, enclosed shopping malls haven’t fared as well. Mall operators have faced significant losses and bankruptcies due to a decline in foot traffic and rent amid the pandemic. Malls have lost a third of their value in four years, according to recent data from Green Street. That has prompted the sector to look for ways to reinvent itself and win shoppers back, such as by adding more “experiences” like trampoline parks or restaurants.