From the Wall Street Journal this morning:
"A growing number of retailers in city office districts are relocating their businesses to the suburbs, where visits to shopping centers are on the rise as fewer people commute to downtown workplaces.
"With average office usage rates still only around half of where they stood before the pandemic in many major cities, many bars, restaurants and other retailers that cater to the five-day-a-week office crowd have been reeling.
"Pedestrian foot traffic in U.S. urban downtowns was down about 25% in April compared with the same month in 2019, according to real-estate software provider MRI Springboard. Nordstrom’s announcement last week that it was closing two stores in San Francisco was the latest sign of retailers’ discontent with declining sales and rising property crime in big cities."
The story goes on:
"Some restaurants and retail businesses are now moving from their once bustling urban locations to the nearby burbs. Several restaurant chains have expanded beyond office corridors since the pandemic, including salad shop Sweetgreen, which closed several locations in Los Angeles, Boston and New York City last year.
"While the firm said it isn’t abandoning cities, as of last summer, half of Sweetgreen’s footprint was in the suburbs, up from 35% at the end of 2019, the company reported.
"Suburban landlords say demand from retailers was strong during the first months of this year, even with high inflation and rising interest rates. Shopping-center owner Site Centers reported record-high leasing in the first quarter, while owner Phillips Edison reported a new high for occupancy. Retail Opportunity Investments Corp. said its portfolio is more than 98% leased."
- KC's View:
I can vouch for this, just from the perspective of my small Connecticut town (about 13 square miles, with about 21,000 residents), where there are three major retail developments in various stages of construction. And yes, there's a new Sweetgreen. We've traditionally been a commuter town, with a train line that goes directly to Grand Central Terminal in New York City (that's why we bought our house here 39 years ago - at the time, both Mrs. Content Guy and I were commuters); today, however, the train station parking lots are usually pretty empty on Mondays and Fridays, and the tenor of the town has changed.
I used to write a lot here about the urbanization of America, as people got married later, had fewer children, got apartments and condos instead of houses, and might not even buy cars - it was the national trend, and cause to think about how traditional suburban retail had to adjust.
The pandemic changed a lot of that, though I do think the point the Wall Street Journal makes is valuable - that these new suburbanites, who work part-time at home and value having yards and greater work-life balance, also are going to want the kinds of retail and services to which they had access in the city.
Which is why our town, and so many towns, are seeing significant retail development. The mistake would be to think that the retail of yesterday is going to satisfy the consumers of today and tomorrow.