How e-commerce is impacting Boston real estate, as it pertains to commercial retailers that long occupied the largest spaces in shopping malls across Massachusetts, the rise of e-commerce has meant shrinking, or in some cases, going out of business altogether for many store owners.
The result is that its hurting the commercial section of the Boston real estate market.
Saddled with these large spaces to rent, landlords are increasingly welcoming non-retail tenants like coworking spaces, healthcare facilities, and experience-based pop-ups.
It’s a fundamental paradigm shift — it’s not the end of retail, but a substantial repositioning of it,” says Mark Dufton, CEO of Real Estate at Gordon Brothers, the global advisory, restructuring and investment firm. “We’re seeing an explosion of non-retail and quasi-retail uses backfilling open space — including healthcare, education services, fitness and entertainment — much more than we were seeing before.
General Growth Properties, Inc., the second largest shopping mall owner and operator in the U.S., owns 127 retail centers across the country. At least part of 46 of these centers were replaced by new tenants — and only a quarter of them were other department store retailers, JLL data shows. The rest were filled with a mix of food and beverage, sporting goods and entertainment uses.
Smaller retailers are taking advantage of the available space, leading to a rise in entrepreneurial retail concepts. Dufton points to the Seaport neighborhood of downtown Boston, where short-term pop-up She-Village flourished earlier this year.
Ten different women-owned businesses had a little space inside, which allowed them the retail presence to build up their brand, but didn’t require the huge capital investment of taking a whole new store and a ten-year lease,” Dufton says.