Strip malls have been a staple of American suburban life for decades. People often overlook these outdoor shopping centers in favor of more glamorous retail destinations like malls and downtown shopping districts. However, these complexes are proving to be a smart investment for retail real estate investors looking for stable returns.

Primary Advantages

Outdoor shopping centers may not be the most glamorous of retail destinations, but they offer several advantages to real estate investors. One of the biggest advantages is lower operating costs. Unlike shopping malls, which require expensive heating, cooling, and lighting systems to keep the indoor environment comfortable for shoppers, outdoor shopping centers rely on natural ventilation and sunlight. This means that utility bills are significantly lower.

Another advantage is the more diverse tenant mix. While shopping malls are often dominated by large national chains, outdoor shopping centers tend to attract a more eclectic mix of tenants, including small local businesses, service providers, and independent retailers. This diversity helps to create a more vibrant and dynamic shopping experience, which can attract a wider range of customers.

Finally, outdoor shopping centers tend to have longer-term tenants than other types of retail properties. Because of the lower operating costs and more diverse tenant mix, tenants are often more willing to sign longer leases, which provides stability for landlords and fewer vacancies.

Best Practices

Shopping centers often require a long-term investment strategy, as it may take time to find the right tenants and build a stable tenant mix. It’s important to be patient and willing to invest in the property over the long term.

Another best practice is to focus on location. The most profitable complexes are in areas with high foot traffic and a stable customer base. Investors should look for strip malls that are located near major highways, public transportation, and other retail destinations.

Finally, it’s important to have a solid understanding of the local market. This means researching the local economy, demographic trends, and consumer behavior. Investors should then be able to make informed decisions about the types of tenants to attract and the types of experiences to offer.

Despite the growing popularity of e-commerce, strip malls are still worth looking into. From lower operating costs to a more diverse tenant mix, these complexes are a smart choice for those looking to invest in retail real estate. Investors can build a stable and profitable portfolio with the right approach.