Why Open-Air Retail Centers Are Thriving in the E-Commerce Era
Open-Air Retail centers have evolved into essential hubs for the digital shopping era—defying predictions that e-commerce would make them obsolete. By evolving to meet new consumer demands, these centers have transformed into vital components of modern retail strategies.
Retailers are now leveraging open-air strip centers as fulfillment hubs, pickup and return locations, and experiential showrooms—blending the convenience of online shopping with the necessity of physical interactions. These changes are creating new opportunities for commercial real estate (CRE) investors.
Open-Air Retail Centers as Fulfillment Hubs
Retailers Utilizing Open-Air Centers for Logistics
To enhance delivery efficiency and meet consumer expectations for rapid shipping, many retailers are repurposing portions of their retail spaces into micro-fulfillment centers, optimizing both in-store and online order fulfillment.
- CVS Health: According to bastiansolutions.com, the pharmacy giant is restructuring its distribution network, including automating major distribution centers, to accelerate product flow to stores and online customers, effectively turning stores into fulfillment hubs.
- Advance Auto Parts: According to the Wall Street Journal, the retailer is overhauling its supply chain by consolidating distribution centers and establishing larger regional hubs to streamline operations and improve product availability.
- Best Buy: According to Chainsupplydive.com, the electronics retailer has been testing smaller store formats that double as fulfillment centers, allowing for quick online order pickups and localized shipping.
- Target: According to corporate.target.com, more than 95% of Target’s online orders are fulfilled directly from its stores, and the company has continued investing in in-store fulfillment to improve delivery efficiency.
Why It Matters for CRE Investors
Open-Air Retail strip centers that accommodate in-store fulfillment models appear to be attracting strong tenants, leading to higher occupancy rates and more stable rental income. Investors who own properties near high-density residential areas are likely to see demand from retailers looking to shorten delivery times and streamline operations.
Omnichannel Retailers Need a Physical Presence
Click-to-Brick Is Growing
Many retailers are realizing that purely online sales aren’t enough. Instead, they are combining digital convenience with physical locations to enhance the customer experience.
- E-Commerce companies like Amazon Fresh, Warby Parker, and Allbirds are opening storefronts to complement their online business.
- According to The Wall Street Journal, Amazon Fresh grocery stores integrate e-commerce technology with in-person shopping, allowing customers to use Just Walk Out checkout and Alexa-powered shopping lists.
- Open-Air retail centers allow retailers to engage customers in person, offer product trials, and reduce return costs.
- Buy Online, Pick Up In-Store (BOPIS) is growing, with open-air retail centers playing a key role in this trend.
Why It Matters for CRE Investors
E-commerce brands aren’t abandoning physical retail commonly referred to as “brick and mortar”—they’re strategically investing in it. Amazon Fresh, for example, has opened stores across the U.S. in high-traffic locations, further reinforcing demand for open-air retail center spaces. CRE investors who own well-located strip centers can benefit from this growing trend.
Online Order Pick Ups, Exchanges, & Returns Are Driving Store Traffic
Retailers Are Using Open-Air Retail Centers to Handle the Entire Post-Purchase Process
Online shopping doesn’t stop when a customer clicks “buy.” Many consumers still want the option to pick up, exchange, or return items in-store, and open-air strip centers are playing a critical role in making this easier.
- Kohl’s & Amazon: According to businessinsider.com, Kohl’s accepts Amazon returns at its open-air strip center locations, driving foot traffic into stores without requiring packaging or labels. Kohl’s also gives customers doing an amazon return a coupon to drive sales during the same visit.
- Ulta Beauty: Customers can buy online, pick up in-store (BOPIS) or exchange shades without waiting for shipping delays.
- Petco: According to petco.com, pet owners can return or exchange pet food and supplies in-store after buying online, avoiding return shipping costs.
- Dick’s Sporting Goods: According to retailmenot.com, shoppers can exchange sizes in-store after ordering online, keeping sales from turning into lost revenue.
- Old Navy: Online shoppers can return unwanted clothing items in-store for a hassle-free refund instead of mailing them back.
Why It Matters for CRE Investors
In-person returns don’t just help retailers reduce logistics costs—they also bring more shoppers to retail centers, increasing overall foot traffic. As more brands expand their BORIS (Buy Online, Return In-Store) and BOPIS (Buy Online, Pick Up In-Store) options, well-situated open-air retail centers with return-friendly tenants will be better positioned to attract long-term leases.
Open-Air Retail Centers Are Evolving Into E-Commerce Showrooms
Retailers Are Using Physical Stores as Showrooms for Online Sales
Many online-first retailers have discovered that customers want to see and test products before purchasing online. Instead of large department stores, these brands are moving into retail strip centers, transforming retail spaces into physical showrooms.
- Bonobos, Casper, and Warby Parker operate showroom-style locations where customers try products but complete purchases online.
- High-end electronics, furniture, and apparel companies are increasingly using open-air retail strip centers as low-cost showroom alternatives to malls.
- Retailers save on inventory costs by keeping minimal stock on-site while still providing customers with an in-person shopping experience.
Want to Learn More?
FNRP focuses oin acquiring high-quality retail strip centers that align with evolving retail trends. Explore opportunities or get access by clicking on the button below.
Want More Insights on Strip Center Investing?
This article explored how e-commerce is helping fuel growth in retail strip centers—but that’s only part of the story. For a broader look at why retail strip centers are gaining attention from passive investors, check out our previous article here.
Disclaimer: An investment in commercial real estate is speculative and subject to risk, including the risk that all of your investment may be lost. Securities are only available to verified accredited investors who can bear the loss of their investment. FNRP and its affiliates do not provide investment, financial, tax, legal or accounting advice. The contents of this e-mail have been prepared for informational purposes only, and are not intended to provide, and should not be relied on for, investment, financial, tax, legal or accounting advice. You should consult your own investment, financial, tax, legal and accounting advisors before engaging in any transaction.
