A version of this article was previously published on Commercial Search.

The retail property landscape transformed significantly during the COVID-19 pandemic, and it’ll likely take time for tenants, landlords, and cities to adjust to the new normal. However, one pre-pandemic issue persists: how urban property owners and developers grapple with the oversupply of ground-floor retail.

Explore tips for developers and owners to assess their ground-floor retail approach in an evolving environment.

Industry Outlook

The abundance of retail property accelerated as lockdowns eased with high turnover and an industry struggling to attract their client base back to brick-and-mortar locations.

Cities, long relying on retail sales as a key source of tax revenue, tend to assume all ground floors in dense neighborhoods can—or should—be retail.

Some developers think differently, but still exacerbate the problem by relying on the rinse-repeat tradition of hiring a broker and waiting. More property owners and consultants are embracing the need for change, the breakage of old norms, and testing new strategies, uses, and looks.

Ground-Floor Retail Challenges

Ground-floor retail is one of the most challenging product-types in commercial real estate, and owner-developers that take status-quo approaches may see spaces empty for too long.

Office or multifamily firms develop many urban mid-to-high-rise buildings, and the ground floor shop space may be treated as an afterthought to the 100,000 square feet of corporate space or housing they need to fill.

This places heavy reliance on a store’s front door and brand to fill the upstairs properties, because prospective tenants don’t want to deal with dark storefronts and zero activation.

With these challenges, developers that break their own mold, challenge standard approaches, and create innovative solutions could be more likely to find success.

New Approaches to the Ground-Floor Challenge

Urban commercial real estate owners and developers have capitalized on new approaches and expanded on proven strategies to fight the ground-floor property struggle. Some key tips and tactics follow.

Pre-fit Retail as Move-in-Ready for Shops and Cafes

Retailers and restaurant businesses decimated by the pandemic are now resurging—in pockets.

Landlords who position their properties as first-tier move-in-ready choices are leasing faster than shell spaces requiring lengthy buildouts or more permitting than strictly necessary.

Curate Instead of Simply Lease

Few retail spaces should be viewed merely as the single shop to be leased. They should be treated as part of the commercial and retail neighborhood, whether a dense urban location or a more dispersed environment.

Landlords should work closely with their leasing advisors to develop a plan to curate appropriate retail or restaurant fits that can thrive in the local ecosystem.

For example, an urban ground-floor location should be looked at for the context of the street experience and nearby shops, with ideal target customers and competitors, similar to the curation in shopping centers and mixed-use developments.

Enliven the Ground Floor, Lobby, or Exterior Brand

Experienced developers know the ground-floor is the first impression for the building’s office, housing, or hotel customers on upper floors.

Developers should address these key questions:

• Are the lower-level shops or cafes appropriate to the overall project’s positioning?
• Do they create a welcoming, thriving energy that signals an engaging property?
• Is the architecture, interior design, signage, and other elements complementary to the building’s overall leasing strategy?

Innovate New Uses, Not Just New Tenants

As the pandemic evolves, many landlords see new and innovative businesses seek space. These are often the most exciting potential tenants because consumers are enthusiastically returning to brick-and-mortar shopping.

Following careful research and due diligence, property owners can capitalize on new concepts that draw buyers and visitors benefiting the entire project.

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