The Rise of Strip Malls in a Post-Pandemic World

• Strip malls are experiencing strong demand and have become a bright spot in the commercial real estate sector, in contrast to other property types.

• The leased occupancy rate for strip center real-estate investment trusts (REITs) is at 95.3% as of the first quarter, the highest level in about eight years, with physical occupancy at 92.4%, similar to pre-pandemic levels.

• The widened gap between leased and physical occupancy is due to landlords signing leases more quickly than retailers can move in, indicating a robust market.

• The flexibility of remote work has led to increased visits to strip malls as consumers spend more time closer to home, contributing to the sector's strength.

• Physical retail is still in demand for e-commerce order fulfillment and returns, and the lack of new supply for strip centers has driven up demand.