The CRE sector undoubtedly faced major disruptions during the pandemic —enough to capture headlines and spark Congressional hearings.
But through it all, retail CRE has quietly become one of the most resilient and promising asset classes.
Office demand continues to slide, down 160 million square feet since Q1 2019, and industrial, though growing, is now oversupplied.
Retail, on the other hand, is experiencing a supply-constrained rebound — it’s the tightest CRE category as of late 2024, with demand for well-located, adaptable retail space exceeding pre-pandemic levels (source).
This resurgence is not surprising. Perhaps growing weary of the impersonality of e-commerce, consumers want to experience retail again — they want to touch what they are buying and reestablish a connection to their communities.
CRE investors are now rediscovering the value of retail CRE as a source of steady and competitive returns, even in the face of macroeconomic volatility.
So how can you, as a CRE landlord, meet this moment and help your retail tenants succeed?
In this guide, we break down five proven CRE retail leasing strategies that you can use to help your tenants thrive.
You’ll learn how to use GIS tools and consumer analytics to match the right brands to your space, structure leases that share risk and reward, and perhaps more importantly, build relationships that turn short-term deals into long-term value.
Understanding the retail leasing landscape in 2025
You don’t need a crystal ball to see that retail going forward will look very different from just a few years ago.
Consumer behavior and technology are reshaping the playing field, and if you’re leasing retail space, you need to adapt your strategy to these changes in order to remain competitive and maximize occupancy.
1. Rise of experiential retail
Retail spaces are no longer just showrooms. Retail tenants are turning their stores into destinations where customers can engage in interactive activities.
It’s now common to see beauty brands offering live makeup and skincare tutorials or bookstores hosting author-led workshops.
These activities drive foot traffic and social media buzz that benefits not just one store but the entire property in many cases.
As a landlord, you should earmark space for experience-driven tenants. It might be time to build out a shared infrastructure that supports fast turnover.
2. Growth of omnichannel retail models
Omnichannel retailers that blend in-store, online, and mobile experiences now dominate leasing conversations.
These brands are always looking for physical locations that can serve as fulfillment hubs and customer experience centers.
After all, industry estimates say that 67% of shoppers who pick up online orders in-store end up buying additional items.
If you want to attract these tenants, make sure that your spaces can support their logistics with back-of-house square footage and parking for delivery or pickup.
These types of tenants will also likely expect broadband and loading zone availability, so consider investing in those features.
And when negotiating leases, be open to minor space reconfigurations that support the “buy online, pick up in store” model.
3. Changing lease structures
Shorter, performance-driven lease terms are now the norm for new concepts and expanding DTC brands.
You need to be ready to offer more than just the standard 5-year fixed-rate lease.
Prepare a menu of lease structures that include step-up rents, revenue-sharing models, and performance-based TI reimbursements to give tenants the flexibility to grow while protecting your downside.
The 5 Winning Retail Leasing Strategies
1. Offer flexible lease terms and incentives during commercial lease negotiation.
a. Flexible lease terms tend to attract modern retailers that want to test markets before committing long term.
To cater to them, shift your leasing strategy to include 1– to 3-year lease options, especially for digitally native and emerging retail brands.
Consider offering short-term leases in lifestyle centers or new developments to stay competitive in tight markets like Austin, Nashville, and Miami, where the Q4 2024 retail availability rate was just 4.7%, according to CBRE.
Position these flexible terms as a trial run, with the potential to convert to a long-term lease based on performance.
b. Consider offering tenants a percentage rent structure, especially if they’re in variable-revenue sectors like food, fitness, or apparel. Use a base rent plus a percentage of gross sales after a sales breakpoint.
For example, during the pandemic recovery phase, landlords like Simon Property Group adapted by negotiating rent structures that included abatements and deferrals, effectively tying rent to tenants’ sales performance.
You can adapt this as a contingency model during lease renewals or for new concepts entering your market.
c. Provide competitive tenant improvement packages to attract high-quality brands and reduce long-term vacancy rates.
This lets you support your tenants as they tailor spaces to their needs, which ultimately enhances their operational success as well as your property’s performance.
2. Leverage data-driven site selection and market analysis.
Retailers increasingly demand granular data before signing a lease — more than the square footage, they want to know who’s shopping nearby.
a. Consider using platforms like Placer.ai, which offer foot traffic heatmaps that help both you as a landlord and your tenants assess peak visit times, customer dwell time, and even competitive co-tenancy.
You can also use CoStar’s Retail Analytics module to see tenant mix gaps based on nearby consumer spending categories.
b. Stay updated on trends by reading reliable sources like The Wall Street Journal’s CRE section.
Their CRE reports are quite comprehensive, so you can use them to spot shifts in consumer and market behavior that you may be able to leverage as a CRE landlord.
For example, one of their recent reports says that open-air neighborhood shopping centers have become highly desirable, with footfall 12% higher in Q3 2024 than during the same period in 2019.
3. Focus on mixed-use and experiential retail spaces.
Mixed-use developments that combine retail with residential and office spaces create vibrant communities that drive consistent foot traffic and enhance the overall appeal of retail spaces.
Take inspiration from projects like The Wharf in Washington, D.C., and Hudson Yards in NYC. These developments have shown how blending retail, residential, and office can amplify foot traffic and increase dwell time.
Retailtainment also continues to rise. Consumers are spending more on experiences than goods, so retailer tenants are adapting.
Perhaps it’s time to lease some of your CRE spaces to brands that double as entertainment, like immersive art spaces and AR-integrated showrooms.
This may help turn your property into a destination and drum up higher foot traffic for adjacent tenants.
4. Build strong landlord-tenant relationships.
a. Provide customized leasing solutions to meet tenant needs. Understanding a tenant’s brand lifecycle — from market entry to expansion — and adjusting your lease structures accordingly can make occupancy more stable and improve NOI over time.
Offer lease structures tailored to the tenant’s size and growth stage, and even their sales model.
Consider using step-up rents and or expansion clauses to meet their needs. Do you have tenants entering a new market?
Perhaps you can propose a trial lease with performance milestones. For growing concepts, consider pre-negotiating adjacent space expansions to keep them on your property as they scale.
b. Offer marketing and operational support to enhance tenant success. Why not coordinate community events and shared promotions to increase tenant visibility and sales?
Try to support tenants through shared digital advertising and event programming. Such programs foster community and ultimately boost sales per square foot.
c. Maintain transparent communication regarding lease terms and maintenance responsibilities to prevent misunderstandings and build trust.
Check in with your tenants frequently and give them clear and open feedback channels to prevent misalignment.
If you have growing tenants, discuss adjacent unit availability with them early on to encourage them to expand in place instead of moving to another property.
5. Optimize lease structures for long-term profitability.
a. Consider percentage rent, breakpoint leases, and revenue-sharing models. These structures — which are now considered to be among the best retail lease models — help retailers manage risk while rewarding landlords during high-performing periods.
In food halls and entertainment centers, it’s increasingly common for tenants to pay a fixed base rent up to a certain sales threshold.
Once their gross sales exceed that predetermined breakpoint, they begin paying a percentage of their gross sales in addition to (or sometimes instead of) the base rent.
This setup works especially well for small-format, high-margin tenants like dessert kiosks and fitness studios.
b. You can also include escalation clauses to adjust rents in line with inflation and changing market conditions.
Keep in mind that well-structured leases should reflect shared interests.
For example, a performance-based TI allowance (where a portion is reimbursed based on sales thresholds or longevity) can protect your capital as a CRE landlord while still offering tenant support.
Conclusion
Retail is evolving, and only CRE landlords who manage to evolve with it will win. Now more than ever, it’s important to build real partnerships — not just contracts — with your tenants.
Adapting your leasing strategy will help you attract stronger brands and build more resilient income streams from higher occupancy and better retention.
Do you need fresh funds to implement these changes to your retail CRE? Contact the Private Capital Investors team to explore financing options.
Tell us about your ideas, and we’ll design CRE loans to help you turn your property into a magnet for the next generation of retailers.
