How shopping developments are looking to win over buzzy brands in 2025

“The market has been so tentative, with all the volatility from one thing after the other from the pandemic,” said Greg Lyon, chairman and president of Nadel Architects. “But retail always is dealing with some type of disruptor as an industry, and it always has to evolve. It’s almost like a fashion line, where it needs to reinvent itself every couple of years.”

Lyon was one of around 3,000 real estate professionals who gathered at ICSC Western in Palm Springs, California this week for a few days of dealmaking and networking between developers, cities and brand real estate executives. Modern Retail was on the ground, sussing out the trends and what was driving their conversations.

Some brands, like burger chain In-n-Out and the rapidly growing 7 Brew Coffee, see cities and developers ready to roll out the red carpet due to the foot traffic and tax revenue a location could bring to their communities. But for brands, the challenge is not just finding space, but space that also has foot traffic, amenities and population growth.

As Nadel said, “We are seeing more get the green light.”

Here’s a closer look at a few of the key themes shaping retail real estate in the back half of 2025.

Mixed-use is the rule, not the exception

Lyon from Nadel said that, while movie theaters were once a dream anchor tenant, developers are now looking for places like putting greens, VR experiences or pickleball courts to help fill space and drive traffic. Open space, too, is becoming an amenity in its own right.

“You can kind of monetize that outdoor amenity environment,” he said. “You’re increasing the number of visits, lengths of stay and people hanging out because of the environment.”

But the challenge for brands will be finding properties that are willing to invest in making those changes.

Najla Kayyem of Southern California commercial real estate consultancy Kayyem Marketing said one of the biggest challenges in filling vacancies right now is getting property owners to realize that they can tap more than a retail store. From urgent cares to med spas to gyms, she said that the best-performing properties are the ones that offer a multitude of services.

“Customers are channel agnostic, so you need to get them what they want, when they want and how they want it,” Kayyem said. “We still have to shake that mindset of single-use or single-tenant to a mixed-use experience.”

Redeveloping vacant spaces and infill

One way some developers are handling big-box vacancies is by carving them up into smaller pieces to be leased out separately, or into food halls with multiple stalls and stands inside.

“If the big boxes are empty, you might have to [adopt] a strategy to figure out: How do we [transfer property rights] and turn it into three tenants?” Nadel said.

This can come with its own host of challenges — from changing up electrical wiring systems to signage changes to parking requirements. Nadel said property developers are also thinking carefully about what size footprints may be more sustainable, without being “too narrow or too deep.”

But Nadel said even shopping centers that have an anchor or are almost fully leased out may be underperforming compared to newer ones across the street. In turn, some may figure out new amenities to add, become more pedestrian-friendly or create more open spaces.

But none of these improvements comes cheap, especially at a time with higher interest rates. The city of Anaheim, for instance, offers $100,000 matching grants to help businesses secure project development funding, as well as signage improvement funds, to help get more infill development.

Smaller markets show off value propositions

Knowing that launching brick and mortar is an expensive process, and that the current macroeconomic environment is challenging, some smaller cities are leaning into touting their relative value and affordability.

In California, for instance, housing prices have caused smaller towns to grow. The city of Manteca, about 70 miles east of San Francisco and 65 miles south of Sacramento, is projected to have 100,000 residents by 2030 and is on a building spree of over 11,000 homes. It’s already attracted companies like Ikea, Dutch Bros, Top Golf and Chick-fil-A. Manteca’s next big ticket item is The Fez, or Family Entertainment Zone, a 150-acre site that it hopes will build on the momentum from nearby attractions like the indoor water park Great Wolf Lodge.

Manteca Mayor Gary Singh said his town has seen a 40% growth in commercial real estate activity along with a 200% growth in housing since the Covid-19 pandemic, which shook off its status as a bedroom community. “People went to work all day long and only came to sleep,” he said. “But now that they’ve started working from home, you have all those people staying and living in the city and spending money in the city.”

Shifra de Benedictis-Kessner, economic development manager for the city of Fairfield, California, said she often tells tenants and developers how working with a smaller city means faster coordination to get a project done. Where a permitting process in Los Angeles could take eight or nine months, de Benedictis-Kessner said her team can get permits processed in 60-90 days.

“We’re really there to support businesses, and we are small enough that we can partner with our planning folks, and we meet with them on a weekly basis,” she said. “My planning manager is two doors down from me, and I can say, ‘Hey, here’s this amazing business.'”

But for those who want to make the most of the up-and-coming locations, Jermaine McMihelk, co-founder of NewMark Merrill’s Hadler Community Partners division that specializes in undersupplied, inner-city communities, said that it’s important to develop a relationship early — even if there isn’t an availability or property that meets immediate needs.

He said this helps create familiarity and alignment between the property owner, the tenant and the community that leads to more successful properties down the road.

“We are engaging them up front and saying, ‘We love this city, we love this community, we see the value, we see the opportunity. If something comes up, we would love to collaborate,” he said.