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Retail: The Savior of Office?
It’s no surprise that the office sector continues to struggle, faced with maturing debt and the ongoing tug-of-war between return-to-office and work-from-home (which impacts vacancies). Indeed, there has been much talk about converting office space to residential use. And Colliers’ report, “The Interdependency of Office and Retail: How Landlords and Retailers are Teaming Up,” throws shops, restaurants and other retail into the mix as a potential savior of office.
But First, a Retail Boost
A decline in foot traffic due to increased remote work means that “many of the goods and services that supported the office ecosystem have disappeared,” the Colliers report explained. Empty storefronts and vacant retail space have become more common. The silver lining is that “office landlords are willing to invest in and collaborate with local retailers, making upfront investments to sustain the space and bolster the overall building environment.”
The report said these take the form of short-term arrangements, especially with small businesses, requiring minimal investments from office landlords. An additional benefit is that the arrangements offer placeholders until foot traffic returns. On the small-business side, it provides these retailers with tenant-mix diversification.
Repurposing Space
Though plenty has been written about the difficulty of office-to-residential conversions, some are succeeding. The problem is that buildings in some areas might lack specific amenities to serve residents in these conversions. The Colliers report suggests that building owners could solve this problem by offering ground-floor space in converted buildings to retailers like food and beverage outlets, food halls and dedicated amenities. The report also said the ground floor space could be used for community services, including fitness centers or medical facilities.
Rethinking Zoning
The report said city councils and planning boards can do their part by “rezoning urban districts for residential and retail conversions.” This is already happening to an extent. However, building owners still run into red tape, regulatory obstacles, and traditional zoning mandates when repurposing office buildings. Furthermore, “aligning interests across the private, public and government sectors are essential steps toward creating a cohesive urban environment,” the report pointed out, adding that this helps encourage local and national retailers, spearheading long-term growth.
- ◦Lease
- ◦Development
- ◦People
- ◦Economy
- ◦Policy/Gov't
