Retail Real Estate Trends for 2025: Smaller Stores, Longer Leases, and Strategic Suburban Growth

Retail Real Estate Trends for 2025: Smaller Stores, Longer Leases, and Strategic Suburban Growth

As we approach 2025, the retail real estate market continues to evolve in response to changing consumer expectations, economic conditions, and advancements in e-commerce. Retailers are adopting new strategies to optimize their footprints, secure favorable leases, and stay competitive. From smaller stores and extended lease terms to suburban expansion and experiential retail, these trends are defining the future of retail real estate.

Smaller Store Formats Lead the Way into 2025

Retailers are scaling down their physical footprints, focusing on efficiency and targeted customer engagement. Smaller store formats not only reduce costs but also allow businesses to establish a presence in high-demand areas such as urban centers and suburban power hubs.

For example, brands like Target have rolled out “small-format” stores designed for urban neighborhoods, offering a curated selection of products tailored to local needs. These stores double as micro-fulfillment centers, enabling faster online order processing and last-mile delivery.

Longer Lease Terms for Stability and Growth

With limited new construction and rising demand for high-quality retail spaces, retailers are committing to longer lease terms to ensure stability. CBRE reports that average lease terms have grown to 96 months as businesses aim to lock in favorable rates and reduce the risk of rent volatility.

This trend gives retailers the confidence to invest in in-store upgrades, integrate advanced technologies, and adapt their spaces for omnichannel operations.

Suburban Expansion: The Next Big Opportunity

Suburban markets are becoming the new battleground for retailers as population growth and migration trends shift away from urban centers. Suburban power centers, strip malls, and mixed-use developments are seeing increased demand from both established brands and up-and-coming retailers.

Cities like Austin, Nashville, Tampa, and Raleigh are hotspots for this growth, offering high foot traffic, lower operational costs, and strong customer bases. Suburban Maryland and Northern Virginia are also experiencing significant retail development as families and young professionals seek alternatives to city living.

Omnichannel Retail Strategies Dominate 2025

The integration of digital and physical retail channels is no longer optional—it’s essential. Retailers are turning their physical spaces into multipurpose hubs that support both in-store shopping and online order fulfillment.

Take Walmart as an example: the retail giant is increasingly using its stores as fulfillment centers for same-day delivery and curbside pickup. This approach not only improves efficiency but also boosts foot traffic and customer satisfaction.

Experiential Retail: Elevating the In-Store Experience

In 2025, experiential retail will continue to gain momentum as retailers aim to create unique shopping experiences that can’t be replicated online. Interactive displays, community events, and personalized services are just some of the tools brands are using to engage customers.

For instance, Nike’s House of Innovation flagship stores provide an immersive shopping experience with augmented reality (AR) tools, customizable products, and exclusive in-store events, setting a benchmark for experiential retail.

Adaptive Reuse: Breathing New Life into Old Spaces

As traditional malls and big-box stores struggle, developers are repurposing these spaces into mixed-use developments that combine residential, office, and retail components. This trend not only revitalizes struggling retail areas but also aligns with changing consumer demands for live-work-play environments.

A prime example is the redevelopment of the Westfield Promenade in Los Angeles, where a former mall is being transformed into a vibrant mixed-use community featuring apartments, offices, and curated retail spaces.

Retail Real Estate Outlook for 2025

The retail landscape is evolving rapidly, but the opportunities for growth are immense. Key strategies for success in 2025 include:

• Retailers: Focus on smaller, more efficient store formats, invest in omnichannel capabilities, and secure longer leases to stabilize costs.

• Property Owners and Developers: Leverage suburban growth, explore adaptive reuse projects, and attract experiential retail tenants to maximize property value.

How Helm Ventures Can Help

At Helm Ventures, we specialize in helping retailers, investors, and developers navigate the complexities of the retail real estate market. Our team provides data-driven insights and customized strategies to ensure your success in this dynamic environment.

As we head into 2025, now is the time to capitalize on emerging trends and position your business for long-term growth. Contact Helm Ventures today to discuss how we can support your retail real estate strategy.