Legacy chains such as Bed Bath & Beyond, Conn's HomePlus, Party City and Forever 21 have come and gone. But others — updated versions of existing concepts or totally new ideas — are increasingly bringing a more diverse array of retail options to shopping centers and malls.
In the past year, an indoor golf-simulator club replaced a grocery store at a New Jersey retail property. Not far away, an IV drip center operates at a strip mall that includes a Starbucks and a Panda Express. Also in North Jersey, a doggy day care facility has found a home near a Whole Foods Market and a Jersey Mike's Subs shop. And this kind of leasing is happening all over the country.
A growing cadre of retailers related to wellness, health care, fitness, recreational sports, pets and kids are taking storefronts as they seek visibility and proximity to customers. The rise in these categories reflects activities and pastimes that have become increasingly important and prioritized by Americans, in at least some part due to the pandemic, according to retail landlords and brokers.
In the aftermath of COVID-19, some consumer habits changed. People wanted to actively foster their wellness, some retail property officials said. And Americans who acquired pets like dogs during the pandemic, and were in lockdown at home with them, didn't want their canines to suffer separation anxiety when they went back to work.
The rise of new tenant categories coincided with landlords needing to fill stores left vacant during the pandemic's retail shakeout.
There's also been a proliferation of grocers targeting the ethnically diverse United States, food markets catering to patrons by offering Korean, Chinese, Japanese, Southeast Asian, Mexican, Caribbean, South American and Middle Eastern food. These are no longer just neighborhood mom-and-pop shops, but in some cases they have grown into chains with regional and national reach, even leasing large spaces at malls, replacing big-box anchor tenants and occupying smaller locations like former Rite Aid sites.
There's even a new crop of digital native companies, including furniture and housewares seller Wayfair, that are opening brick-and-mortar locations. Wayfair will be debuting its third large-format store, roughly 114,000 square feet, at the Rich Hill shopping center in Yonkers, New York, in early 2027. The first one opened in Wilmette, Illinois, last year and a second one is slated for Atlanta in 2026.
Retail landlords, such as Los Angeles-based Macerich, acknowledge that they have a wider array of types of tenants to choose from these days.
"Coming out of COVID, the breadth and depth of — we don’t even call them retailers anymore, it’s really uses — has expanded tremendously," Doug Healy, Macerich senior executive vice president of leasing, said on a recent earnings call. "So when we talk about leasing, there are the key legacy retailers. They’ll always be a part of our shopping centers. But you’re also looking at digitally native and emerging brands, international brands, food and beverage, restaurant, medical, entertainment, electric vehicles, fitness, home furnishings, groceries. So the uses that we have to choose from are really unprecedented today."
'Rise of new categories'
The topic is so timely that a general session called "The Next Big Retail Categories" was held Monday at the ICSC conference in Las Vegas. It was billed as an exploration of the "rise of new categories, like cannabis and resale, to the continued expansion of non-traditional sectors, like health and wellness."
For example, resale or secondhand stores — "circular" or recycled retail — have grown in popularity as shoppers look for sustainable ways to clothe themselves, not just to save money, according to Kristin Mueller, president of Retail Property Management at JLL. Resale chain Buffalo Exchange has roughly 40 locations across the United States, according to its website.
The surge in resale stores "is a trend that I've been watching for a while," Mueller said Monday at a JLL brokerage event at ICSC. "Now it's really coming to fruition." And tariffs could accelerate this trend, making it harder for some traditional apparel sellers to get imported goods, according to Mueller.
Lining up new types of tenants and new retail concepts is an opportunity for a landlord, said Paul Kurzawa, president of Dallas-based Centennial. That includes "first-to-market retail, first-to-market concepts, whether it's ... fast casual, whether it's accessories, entertainment, or restaurants," according to Kurzawa.
"We need to create a merchandising strategy and execute on a merchandising strategy that gives customers a reason to go past the competition and come to a Centennial shopping center," he said.
The nation's current concern about wellness and preventative care has spawned a wide assortment of retail tenants. Wellness and medical providers are all part of the so-called medtail movement. On the wellness front, these tenants include IV infusion centers, offering drips for hydration as well as to deliver electrolytes, nutrients, vitamins, antioxidants, minerals, amino acids and hormones — represented by chains like Restore Hyper Wellness.
There are now spas, like Freeze & Float in Chicago, where patrons can indulge in hot and cold therapy treatments. And this so-called wellness medtail also encompasses cosmetic dermatology, like laser treatments, a use cited by Naveen Jaggi, JLL president of Retail Advisory Services, said at the ICSC event. Simplicity Laser alone has about two dozen locations in the Southwest and West.
"Medical wellness and preventative care will continue to expand in wealthy areas," JLL said in a recent report on medtail. "Concierge medicine, which typically operates on a subscription model, combines wellness and preventative/primary care."
On the medical side, a wide array of services that traditionally would have been offered on hospital campuses are now in storefronts, said James Taylor, CEO of retail landlord Brixmor Property Group. For example, Brentwood, Tennessee-based IVX Health, a national chain of medical infusion-and-injection-therapy sites, has been expanding its footprint and is coming to in New Jersey.
Ethnic grocer expansion
Ethnic grocers are becoming more of a force on the retail leasing front than ever before, serving not only their targeted market but Americans whose taste buds are now craving state for exotic fare. A prime example of that is Lyndhurst, New Jersey-based H Mart, billing itself as the No. 1 Asian supermarket chain in America. This marks the second year that H-Mart has a booth at the ICSC conference.
Specializing in Korean food, it currently has 147 stores in the United States and Canada, recently debuting one at the Sahara Pavilion South at 2620 S. Decatur Blvd. in Las Vegas. More than 400 people lined up for its opening in April. H-Mart acquired that 136,260-square-foot property for $26.2 million and occupies 54,552 square feet there, according to CoStar data.
H-Mart also has two prominent locations at the American Dream megamall in East Rutherford, New Jersey, both a store and a separate Asian-inspired food hall. But the grocer's preference is to own its real estate, For example, a year ago it acquired Oceanview Village Shopping Center in San Francisco, where it has a 75,249-square-foot store, for $37.1 million.
Last September Korean grocer Jagalchi replaced a 75,000-square-foot former J.C. Penney anchor space at Serramonte Center in Daly City, California. Jagalchi, named after the largest seafood market in Korea, said it aims to offer "one-stop space where you can enjoy delicious food cooked in authentic Korean style, shop and experience Korean food culture.”
These ethnic grocers are also filling smaller retail vacancies. The size and neighborhood locations of Rite Aid stores are attractive to independent and ethnic grocery operators seeking small-size grocery operations, according to Rudy Milian, president and CEO of retail consulting firm Woodcliff Realty Advisors.
"In Michigan alone, Atko Market and Bakery, Palm Market, Kareem Market and Papaya Market have opened or plan to open in repurposed Rite Aid locations, especially in areas with significant ethnic populations," he said in an email to CoStar News.
Atko Market and Bakery opened in a former Rite Aid building Livonia, Michigan, according to Milian. A former Rite Aid in the Detroit suburb of Canton opened as Palm Market, a grocery store specializing in South Asian and Middle Eastern foods, he said. Another vacant Rite Aid location in Sterling Heights, Michigan, is being converted into Kareem Fresh Market, a specialty grocer selling halal meat. And in Dearborn, Michigan, a Rite Aid location will reopen as Papaya Market, sourcing products from the Middle East.
"And that is just Michigan, but ethnic grocers are a growing retail phenomenon across the ever-diversifying U.S.," Milian said.
Not leaving dogs home alone
Pet boarding centers aren't new, but the category has exploded, with operators are looking to lease prominent storefront space, not have standalone facilities. In the wake of the pandemic, a good portion of Americans own pets and consider them like family — and want them treated as such. Some 70% of U.S. households own a pet, which equates to 94 million homes, according to the American Pet Products Association.
That's driven the rapid-fire expansion of so-called "doggy day care centers" — like those run by Phoenix-based Dogtopia — across the country. They are place where canines but can be looked after, and play with other dogs, while their owners are working. These dog day care centers are sprouting up at shopping centers with high visibility.
Dogtopia has more than 285 locations, according to its website. K9 Resorts Luxury Pet Hotel, a self-described "pet hospitality" provider based in Berkeley Heights, New Jersey, has more than 190 "resorts" in 28 states operating or in various stages of development. And there are many other players.
Dog boarding and day care were cited as emerging retail uses by Neha Govindraj, founder of Bonside, which helps finance service-based businesses, at the ICSC event.
"We want to drive convenience for our pet parents," Dogtopia said in an email to CoStar News. "We see dogs more than any other pet service since many Dogtopia dogs visit to two-to-three times a week for dog day care. Positioning ourselves near your favorite grocery store, coffee shop, dry cleaner, etc., only helps build upon our connection to the community while making it easier for parents to drop off and pick up their pups on such a regular basis."
David Townes and Alana Friedman, two retail brokers at JLL in New Jersey, worked on the deal for Dogtopia to open at West Orange Plaza, a shopping center being redeveloped by Levin Management. Chains like Dogtopia cater to those who are "self-conscious" about leaving their dog at home while they go to their "9-to-5," according to Townes.
"So you let them have a great time over there [Dogtopia] and play with all their friends all day," he said. "It's catering to those pet parents that really care a lot about their pets."
In tandem, urgent care veterinary centers have been rolling out nationally, with many leasing retail space. The chains taking that real estate strategy include BluePearl Specialty and Emergency Pet Hospital.
Schools for little fish
Children's indoor swim schools are also finding locations in retail space, according to Townes and Friedman. These schools are in some cases replacing the old-school venue for swimming lessons, the YMCA, and are no longer just being relegated to industrial space.
"Alana and myself, we're both parents of children and swimming is a critical life skill that every parent wants their kids to be able to do," Townes said.
He and Friedman have placed Goldfish Swim School at the Princeton strip mall Nassau Park Pavilion and are looking for other sites the Garden State for the chain. There are a lot of competitors in the kids swim school sector, including Big Blue Swim School and Aqua-Tots Swim School, according to Friedman. Big Blue just debuted a school at the Plaza 46 shopping center in Woodland Park, New Jersey.
"There's a couple of different branded names out there taking huge — 10,000 square feet of space — on major highways," Friedman said.
A Stewie the Duck Swim School is slated to open this fall in Clifton, New Jersey. Stew Leonard Jr., CEO of the regional supermarket chain Stew Leonard's, is behind it. That 9,300-square-foot aquatic facility will be located at the Styertowne Shopping Center, near Stew Leonard’s Farm Fresh Food & Wine. Leonard started a foundation that funds water safety in memory of one of his sons, who drowned when he was a toddler in 1989. The first Duck Swim School is in Norwalk, Connecticut, where the grocer is based.