It wasn’t so long ago that words like “retail apocalypse,” “death of physical stores,” and “final curtain” peppered the media and led industry conferences and panel discussions.

Looking back, there were compelling reasons for the gloom and doom, including too much retail space, the move toward online convenience, and the pandemic’s impact.

These days, the retail landscape is far different. Experts told Connect CRE that 1) the war between bricks and mortar and e-commerce is over, while 2) retail tenants continue to expand.

Allies, not Enemies

Online OR retail has morphed into online AND retail. “Retailers are no longer treating online and bricks-and-mortar as separate strategies,” Outside the Lines Inc. CEO J. Wickham Zimmerman observed. “They are integrating the two to create a seamless experience.”

Meghann Martindale, Avison Young’s Principal and Director of Market Intelligence, Retail, explained that physical stores support brand awareness and act as fulfillment centers, while also driving customer conversions and loyalty. Meanwhile, “online serves as the convenience factor, data collection and digital/targeting engagement efforts,” she noted.

Stephanie Skrbin agreed, pointing out that physical stores have morphed into fulfillment notes, data engines and brand awareness tools. Additionally, “retailers are investing in computer vision, real-time analytics and AI-driven insights to optimize store layouts, promotions and shopper journeys,” said Skrbin, a broker with Axiom Retail Advisors.

“This shift is also supporting the rise of open-air retail centers that offer the social, walkable and lifestyle-oriented environments that today’s consumers prefer,” Zimmerman added.

The experts said that retailers will continue to find ways to balance brick-and-mortar with online strategies. “Big data and artificial intelligence will continue to lead the way,” said Darren Pitts, co-founder/executive vice president, Velocity Retail Group. “Being good at physical and online strategies is a requirement to be effective in the retail sector and to serve today’s increasingly demanding and tech-savvy consumer.”

Foundations of Expansion

During the 2010s, throughout the pandemic and into 2025, consumer buying behavior combined with failed store concepts and seemingly ongoing bankruptcies spurred fears that excess space would be the retail sector’s permanent condition.

These days? As successful retailers continue to merge the physical and online aspects of retail successfully, “tenant expansion continues because physical retail remains strong and consumers value the in-person experience,” said Stephanie Skrbin.

“Demand for physical space continues to be stronger than new supply being constructed in the market,” Pitts added. “Increased costs for new development have slowed new construction, pushing vacancy rates to an all-time low.”

However, as is the case in most commercial real estate sectors, retail space demand and tenant expansions aren’t black-and-white. Martindale explained that there’s been a shift in expansion approaches. Rather than gobbling up space without rhyme or reason, tenants are moving toward operations as a driver of profitability.

“I believe the ‘growth at all costs’ era is over, and expansion strategies will be much more disciplined going forward,” she observed.

Tenants are also looking toward a “Plan B” amid constrained space. Pitts said that one solution has been to retrofit existing buildings. However, “there just hasn’t been enough supply to go around.”

Martindale pointed out that Plan B tends to vary, based on the tenant. Some retailers might fixate on a location and wait until space becomes available. “For more flexible retailers, Plan B may be considering the secondary street or center location, smaller footprints or a pop-up as proof of demand if viable operationally in order to secure the physical store in the trade area more immediately,” she added.

Unlike what was forecast a decade or so ago, e-commerce hasn’t killed brick-and-mortar. These days, “retail and restaurant activity, overall, is still strong, as is competition on availabilities in A and B centers,” Skrbin said.