In a historic shift for the retail property sector, service-based tenants are expected to lease more space than goods-based tenants this year, driven by food & beverage, fitness and healthcare. A consumer focus that has been shifting to experiences rather than goods and services is regaining momentum after being derailed by the pandemic, according to a JLL report.
Quick service and fast casual restaurants like McDonald’s, Chipotle, Dunn Brothers Coffee and Potbelly are dominating the F&B expansion, while Ally Personal Training, Planet Fitness and Club Pilates are driving the active fitness momentum. Urgent care centers, dentists and opticians are fueling growth among health tenants.
The retail sector continues to be challenged by a lack of new supply as well as a mismatch between existing supply and demand. JLL said availability is still at record lows, which is pulling leasing activity down by 15.5% from the previous quarter. This challenge is magnified by a 15-year low in annual construction starts, which sank 49.2%, while deliveries decreased 12.1% from the previous quarter. This suggests there will be no immediate relief to the supply crisis although construction activity is expected to accelerate in the coming years, the report said
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