The retail sector—battered by the rise of e-commerce and the pandemic—is poised for a comeback in 2024, said Ben Witten, head of real estate strategy at Placer.ai at iGlobal Forum’s panel, Navigating Retail Real Estate with Location Intelligence: Trends and Tactics for 2024.
The discussion, moderated by Founder and CEO of Mural Real Estate Robin Zeigler, focused on how grocery, discount, and other stores have boosted mall attendance and renewed interest in retail assets from investors like Blackstone and Crow Holdings.
“We’re starting to see these billion-dollar funds that are beginning to deploy capital in these retail strategies,” Witten said.
Placer.ai tracked a suburban migration among hybrid workers, a resurgence in retail within those markets, and stark divides in office attendance between cities through anonymized cell phone data from 30 million devices. Takeaways included:
Suburban migration: Retail assets in Seattle, Portland, and other Northwest markets have seen a stronger recovery since the pandemic, likely thanks to hybrid workers moving to those areas, Witten said.
But populations have also grown in Idaho, Nevada, Utah, Texas, and Florida as hybrid schedules give workers more flexibility to relocate to larger, more affordable regions in search of a higher quality of life, Zeigler said.
Internet-proof business models: Zeigler said the strongest retailers are those that are “internet-proof”—such as grocery, discount, and dollar stores—and those that master omnichannel retail.
“There are just some goods and services that cannot be done online,” Zeigler said. “There are human touchpoints and relationships that happen in well-curated, merchandised retail environments that the internet just can’t replace.”
Consumers still shop in person, while e-commerce shopping has slowed down to about 15 percent of total overall sales, Witten said. Foot traffic at retail stores was higher every month for the first half of 2024 than the same period in 2023, save January, according to Placer.ai data.
A return to office divide: But location data doesn’t only paint a picture of retail’s renewal. It also showed how remote work continues to hamper office recovery, similar to how online shopping disrupted the retail industry, Witten said.
“Office is the new retail,” Witten said. “Retail experienced the tech disruption of the retail apocalypse and accelerated ecommerce growth with the pandemic, and now office is going through its own version of the same thing.”
Class B office space has the lowest occupancy nationwide, according to a Placer.ai and Avison Young analysis. Miami, New York, and Dallas have seen a stronger return to office than cities including San Francisco, Houston, and Los Angeles—likely because of the strong public transit in the former metros, Witten said.
At the same time, remote work has helped bolster retail in the suburbs of the sunbelt and mountain states, including Texas, Florida, Nevada, Utah, and Idaho, where Witten and Zeigler both saw an opportunity for mixed-use, vertical development.