For the better part of a decade, the retail real estate industry sat through an extended funeral that never quite concluded. “Retail apocalypse” became the phrase of record. Anchor tenants filed for bankruptcy in waves: Sears, JCPenney, Pier 1, and Tuesday Morning. Vacancy rates climbed. Investors pulled back. Journalists wrote obituaries for the American shopping center with the confidence of people who hadn’t visited one in a while.
Here’s what they missed: the shopping center wasn’t dying. It was being filtered.
The centers that struggled deserved to struggle. They were built around a tenancy model that prioritized lease volume over experience, treated retail as a warehouse function rather than a community one, and offered no answer to the convenience that e-commerce delivered at scale. But the centers that invested in their tenant mix, physical environment, and role in the surrounding community? Those didn’t just survive. They’re outperforming.
What the Data Actually Shows
The headline vacancy numbers from the peak of the so-called apocalypse masked a more nuanced story. Yes, enclosed-mall vacancies climbed. CoStar data showed regional mall vacancy rates hitting approximately 11.4% in 2022, the highest in decades. But strip centers, open-air lifestyle centers, and well-curated neighborhood retail told a different story entirely. According to CBRE’s 2023 U.S. Retail Outlook, availability rates for neighborhood and community centers dropped to their lowest levels since 2007, finishing the year near 10.2%, driven by sustained demand from service-oriented and experiential tenants filling the void left by struggling big-box chains.
The market wasn’t rejecting retail real estate. It was rejecting bad retail real estate.
And perhaps the most clarifying data point: e-commerce, despite its explosive growth, has plateaued as a share of total retail sales. The U.S. Census Bureau consistently reports that e-commerce accounts for roughly 15–16% of total retail sales, significant but far from the full displacement story that dominated the narrative a decade ago. The other 84% still happens in physical space. The question was never whether people would stop shopping in person. It was whether landlords would evolve their properties to give them a reason to show up.
The Tenant Revolution
The transformation happening across well-managed retail centers right now is a tenant story. The operators who are filling vacancies and driving traffic aren’t the ones from the legacy retail playbook. They’re fitness studios, medical and dental practices, urgent care providers, specialty grocery concepts, chef-driven restaurants, pickleball facilities, and local boutique operators who understand that their physical space is their brand.
This shift has been staggering in scale. Healthcare-related tenants, including urgent care clinics, physical therapy practices, and dental groups, have become among the most active retail leasing categories nationwide. JLL reported that healthcare tenants accounted for nearly 25% of all new retail leasing activity in 2023, a figure unimaginable in 2005. These tenants generate steady foot traffic, maintain strong credit profiles, and serve non-discretionary demand that no e-commerce platform can replicate.
Food and beverages have undergone a parallel transformation. Regional and local restaurant concepts are outpacing national chains in leasing velocity. According to the National Restaurant Association, independent restaurant operators account for approximately 67% of all U.S. restaurant locations. Landlords who once chased national credit tenants are increasingly recognizing that a beloved local operator with community loyalty drives stickier traffic than a chain with 20 other locations in the market.
The Experience Imperative
None of this is accidental. The retail centers performing today have made a deliberate bet on experience, on the idea that a shopping center’s job is no longer to aggregate products but to aggregate reasons to be there.
That means design matters. A 2022 Placer.ai study found that open-air retail centers with dedicated food-and-beverage clusters drove 34% more repeat visits per quarter than centers without them. It means programming matters, with events, markets, fitness classes, and community gatherings that give the center a presence in the neighborhood’s weekly rhythm. And it means tenant curation matters more than almost anything else. One wrong tenant, a use that generates no traffic, no energy, and no reason for a neighboring tenant to benefit, can hollow out a center’s momentum faster than vacancy can.
The landlords winning right now are operators, not just owners. They think about their tenant mix the way a hotel operator thinks about its food-and-beverage concept, as an integral part of the experience, not an afterthought.
The Opportunity Ahead
The filtered landscape over the past decade has left a significant runway for well-capitalized, operationally sophisticated retail owners. Distressed or undermanaged centers in strong demographic markets offer some of the most compelling repositioning opportunities in commercial real estate today. The physical infrastructure is often sound, and location fundamentals haven’t changed. What’s needed is a curation strategy, a capital commitment to the physical environment, and the patience to build a tenant ecosystem rather than simply fill square footage.
The shopping center isn’t dead. It just needed someone to take it seriously again.