DLC CEO Adam Ifshin featured in Total Retail
After over a decade of conversation about the decline of brick-and-mortar retail, the current state of the market is proving the industry’s resilience, with retailers fighting for physical space. The demand for well-located, quality retail space exceeds the available inventory, intensifying the competition for valuable real estate and driving rents up. Clever retailers have become more flexible and creative with the leases they sign and spaces they’re willing to move into. Adaptive reuses, flexibility from prototypical sizes and shapes, and unconventional layouts are all on the table if the location is right. This signals a shift for the industry, where retailers must rethink their deal strategies and deal speed to navigate a highly competitive, constrained market.
What’s Driving the Shift?
With this supply squeeze, one of retailers’ top challenges is the extremely limited amount of new development. High construction costs translate into more than the market can bear in rents, tariff impacts remain, and building new shopping centers takes years, leaving value-driven retailers with few options for expansion. At the same time, excess supply from overdevelopment in the early 2010s has been fully absorbed, leaving limited viable options. A leading tenant side market participant referred to it as “the retail hunger games.”
Sure, recent bankruptcies have helped bring some properties back to the market, but many of them are older buildings that need extensive remodeling or, in some cases, demolition. With limited new property available, retailers are re-evaluating factors like square footage and layouts to get a better deal. The best spaces in the 2025 bankruptcies of Big Lots, Party City, and JoAnn Fabrics are taken. These companies did sales of less than $100 per square foot on average, proving that larger footprints do not equal higher returns. Because of this, many retailers are eyeing smaller footprints in more desirable locations.
