Posted on December 30, 2025
2026 Retail Outlook: Experience-Driven Spaces Take the Lead
Retail: Evolution Over Extinction
For years, retail was often viewed as a declining asset class, driven by the steady rise of e-commerce and accelerated by the COVID-19 pandemic in 2020–2021. Online shopping reshaped consumer expectations around convenience, speed, and price, putting pressure on traditional formats—particularly big-box and commodity-driven retail. At the same time, oversupply in certain markets and several high-profile retailer bankruptcies contributed to the perception that retail was in decline (think Sears, Toys “R” Us, JCPenney, and Bed Bath & Beyond).
However, that narrative was incomplete. Even during this period, well-located and necessity-based retail continued to perform, supported by grocery, dining, services, and experience-driven uses. Strong centers with the right tenant mix and demographics remained resilient, while challenges were largely concentrated in outdated or overbuilt formats.
In reality, retail has been rebalancing rather than disappearing. Physical retail today must offer more than products on shelves—it must provide experiences and environments that online shopping cannot replicate.
This shift has led to a redefinition of retail, not its extinction. Across markets, experiential and mixed-use formats, including pop-ups, entertainment-driven destinations, and hybrid retail concepts, are consistently outperforming traditional strip centers.
These Modern Retail Spaces are Designed to:
- Attract foot traffic
- Encourage longer visits
- Provide experiences that cannot be replicated online
What This Means
Retail is unlikely to return to pre-pandemic norms because the future of retail will favor:
- Picking the right mix of stores for the local area instead of filling in a center with the same big-name chains as everywhere else.
- Adding experience and entertainment will build a high retention rate.
- Combining retail with homes, offices, and lifestyle spaces creates a long-lasting and attractive place to visit.
- Quality, design, and overall experience are more important than just having a lot of space.
Why the Sunbelt Is Well Positioned
- Rapid Population Growth
More residents create a high demand for housing, retail, and services.
- Economic Expansion
The region has strong job growth, especially in tech, healthcare, energy, and service industries. Growing employment attracts workers who need housing, shopping, and amenities.
- Favorable Climate:
Mild winters and warm weather encourage outdoor shopping, entertainment, and mix-use developments
- Pro-business Environments:
Many Sunbelt states have low taxes and business-friendly regulations, which encourages commercial development.
Bottom Line:
Retail sentiment is no longer trending toward its disappearance, but it has become more selective. Performance today is driven by location, tenant mix, and the ability to serve how people actually live, work, and spend time. Markets like the Sunbelt, which support population growth, mixed-use development, and experience-driven retail, remain well positioned. At Lowery Property Advisors, we evaluate commercial properties with this perspective, focusing on fundamentals, market context, and how assets are positioned for long-term relevance.
