Why Small Space Is Big For Retail Businesses!

People don’t plan to fail…they fail to plan! If you want to be a rockstar business banker in 2024, you need to figure out the best places to go hunt for business loans! It is not that hard to figure out. Let the data guide you to where you need to go hunting! Otherwise, the new year could be a big fail for you!  

The folks at Costar recently published an article about leasing activity in the retail space. The Costar chart below shows that the average retail lease space declined from around 4,700 s.f. in 2006 to 3,200 s.f. in 2023. What does this mean? It means that retail businesses are increasingly favoring smaller space. I recently read a different article stating that real estate investors are increasingly acquiring strip malls! This makes sense because the data is telling us that there is where the demand is. If you are doing investor CRE loans, you can use this data to support your deal. Retail business owners who are leasing should seriously consider purchasing to minimize the risk of getting the boot if the property is acquired. You need put together a lead list of businesses occupying small retail space and convince them that now is the time to pull the trigger on the purchase! 

The Costar chart below shows that between 2018 and 2023, over half of all retail leasing activity was for space under 5,000 s.f. Small retail space is huge business! Fire up Chat GPT and research businesses that are occupying small retail space. Now that interest rates are not headed into the stratosphere, you’ll have a good chance of convincing business owners to purchase the space vs continuing to lease.

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