A recent article in REJournals.com noted that the grocery store anchored strip center remains a strong performing retail category. In all geographic markets, there is an over abundance of retail space. There are several reasons for the excess space:
1) Developers overbuilt with the availability of easy financing.
2) The economy has forced many retailers to close locations or cease operations all together.
3) Successful retailers have decided they need less stores in each market, and can fill in the gap with internet sales.
So why have grocery store anchored strip centers remained so strong? David Birdsall, Chief Development Officer for Phillips Edison & Company, says it is because grocery stores can not fill in the gap with internet sales. Every geographic market needs a grocery store. “So far the model for replacing the grocery store with an Internet retailer has not been found, mainly because shopping for groceries remains both a personal preference and because of cost structure ….it’s very difficult to charge a fee for the delivery of one box of pasta or a tub of butter ….for the foreseeable future this shopping center model still has viability.”
What other concepts remain strong or have become strong? Urgent care centers seem to be a growing trend, and you certainly can’t get their service over the internet. Restaurants also report strong sales. On the other hand, the book store, which used to be a staple anchor for a life style center, may be obsolete in the near future. If not obsolete, it certainly will not be the anchor it once was.