According to the International Council of Shopping Centers (ICSC), a strip center is an “[a]ttached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the store fronts, but a strip center does not have enclosed walkways linking the stores. A strip center may be configured in a straight line, or have an “L” or “U” shape.” Strip centers are also known as strip malls. The U.S. has more than 68,000 strip centers from coast to coast, according to CNBC (citing data from ICSC). Strip centers range in size from 5,000sf to over 100,000sf, according to Wikipedia. ProjectionHub states that the average strip center is between 7,000sf and 20,000sf.

Traffic to strip centers was up 18 percent in 2022 compared to pre-pandemic numbers, according to a RetailStat analysis of 2,500 properties (reported by Audacy). RetailWire—citing data from Placer.ai—reports that foot traffic was found to be down one percent at strip centers in 2023 compared to pre-pandemic 2019 levels. That compares to a decline of 2.3 percent across U.S. shopping centers, with visits declining 5.8 percent at indoor malls and 8.5 percent at outlet malls, according to the report. Data from Marcus & Millichap (reported in GlobeSt) indicates that during the past three years, demand in the unanchored strip center subsector more than quadrupled new space delivery, compressing vacancy to 4.7 percent — the lowest recording since 2003. An average of 10,000 new leases were executed annually for 1,000sf to 5,000sf spaces at strip centers during this same period, according to the report.

In its Q–2 2024 retail market report, JLL notes an increasing focus “toward strip centers, particularly from an investment perspective.” The report states further that “[w]ith many centers located close to daily needs destinations, they often benefit from increased traffic and steady income from service-based tenants like medical offices and F&B tenants.” According to a March 2024 report, CBRE Econometric Advisors (“CBRE EA”) estimates the retail sector cap rate (the average for all markets covered by CBRE EA) to be 6.4 percent.

Last Updated on October 6, 2024 by Ramin Seddiq