Strip Malls Surge in Popularity as Investors Take Notice

Strip Malls Surge in Popularity as Investors Take Notice

Once seen as an afterthought in the retail world, strip malls are now experiencing a major revival. Recent trends indicate that foot traffic at these centers jumped 18% in 2023 compared to pre-pandemic levels, outperforming traditional enclosed malls. Additionally, rental rates have steadily increased, with a nearly 3% rise year-over-year in the third quarter, and leasing activity is robust—strip malls currently boast the highest occupancy rates among all shopping center types, with almost 46% of available space being leased.

A key factor driving this resurgence is the unique resilience of strip mall businesses. Unlike big-box stores or shopping malls that are more vulnerable to the growth of e-commerce, strip malls primarily house service-oriented retailers that require in-person visits, such as grocery stores, salons, medical offices, and fitness centers. National brands are taking notice, with Macy’s planning to launch 30 small-format stores in strip centers by 2026 to better serve suburban shoppers.

Investors are capitalizing on this trend as well. The demand for strip mall properties is currently outpacing supply, with buyers willing to pay a premium for these assets. A recent example includes KPR Centers’ acquisition of Eagle Plaza in Voorhees, New Jersey, for $41.7 million—a $12 million increase from what it sold for just two years ago.

The pandemic also played a significant role in shifting consumer behavior, as more people working from home have gravitated toward local businesses for convenience. This change has strengthened neighborhood shopping centers, positioning them as vital hubs within communities and attractive investments for those looking to tap into long-term retail demand.