Beyond the Rooftops: What Retail Market Demand Means for Shopping Center Owners

By Heather Francine
Senior Vice President, Sperry Commercial | The Resha Group
National Chair, Sperry National Retail Group

For years, one of the most common strategies in retail real estate has been simple: follow the rooftops. 

As new homes and apartments were built, retailers followed the population, assuming new residents would create new demand for restaurants, services, grocery stores, and other retail. 

That strategy still matters. But for shopping center owners, the bigger question is what that population growth actually means for your property. 

According to a recent ICSC article, retailers are becoming more selective about where they expand. Population growth remains important, but household income, wage growth, job creation, demographics, housing trends, competition, and existing retail investment are all becoming part of the equation. As R.J. Hottovy of Placer.ai explains, “Population growth certainly is still important today,” but there is now “a lot more nuance” involved in identifying expansion opportunities. 

For an owner with vacancies or leases coming up, this matters. The retailers looking at your center today may be evaluating the trade area much differently than they were five or ten years ago. 

Orange County Retail Is Tight — But Selective 

The latest Resha CRE Investment Signal gives a clear picture of the current Orange County retail market: 83/100, or “Selective Opportunity.” 

Very little new supply is coming online. Just 0.2% of Orange County’s existing retail inventory is currently under construction, while vacancy remains tight at 3.3%. 

For owners, that creates an opportunity. When very little new retail space is being built, existing shopping centers become more important to retailers looking for space. 

But limited supply does not mean every center automatically wins. Asking rent growth has stalled at -0.1%, showing that while space is scarce, retailers and buyers remain selective. 

The market is selective, not soft. 

Three Questions Every Shopping Center Owner Should Ask:

1. Who lives within three miles of your center, and how is that changing? 

Population growth is only the starting point. Are households moving into the area becoming more or less affluent? Is new housing bringing in your existing customers, or a different demographic? 

2. Which tenants are coming up for renewal? 

A lease expiration is an opportunity to evaluate whether the tenant still fits the center, whether the space could attract a stronger operator, and what existing tenants are telling you about the trade area. 

3. What are retailers asking for in your trade area? 

What size spaces are they seeking? What demographics are they targeting? What rents can their business model support? The answers can help determine whether your property is positioned for the demand coming into the market. 

As Heather Francine, Vice President at The Resha Group, puts it: 

“In order to be a trusted advisor for our clients, we need to look at all aspects that impact the sale or purchase of a property. Of course rooftops still matter but we also know that overall demographics, traffic patterns, shopping trends and lifestyle mean just as much to how well a center is going to perform and the right types of tenants to fill any vacancies.” 

The Rooftops Are Only Part of the Story 

First American Data & Analytics analyzed 306 markets and found that only 12.1% experienced growth in both new-home development and retail investment. 

New housing can be an indicator of future retail demand, but it does not tell the whole story. With very little new supply being built, the competition is increasingly between existing centers. That makes property condition, tenant mix, location, accessibility, demographics, and lease strategy even more important. 

The rooftops are still important. But what happens beyond the rooftops may be even more important. 

At The Resha Group, we believe the best retail advice starts with understanding what the market is actually telling you—not just what the headline numbers say. 

Curious how your center stacks up? Reply HERE and we’ll show you. 

Jim Resha & Heather Francine
The Resha Group | Sperry Commercial
jim.resha@sperrycre.com | Heather.Francine@sperrycre.com