Find the Original Podcast Episode Here: Commercial Real Estate Podcast

The FA Take:

What makes a retail center tick? Where are the management opportunities? Where is the potential for value creation? In a recent episode of the Best Ever CRE Show, Gregg Katz was interviewed by John Chang to dive into these questions and discuss how demographics will influence the long-term outlook for the Retail segment of commercial real estate. 

The Impact of Different Generations on Retail

Gregg Katz broke down how Baby Boomers, Gen X, Millennials, and Gen Z each have their own way of interacting with retail spaces. Boomers and Gen X, thanks to low mortgages and solid equity, have more disposable income. Boomers haven’t handed over their wealth yet, which means they’re all about spending on experiences and services that make life more enjoyable. These generations have financial stability, so they’re primed to spend on unique retail experiences.

But here’s the thing—retail centers often get caught up in catering to Millennials and Gen Z, leaving Boomers and Gen X a bit on the sidelines. There’s a real chance for these retail spots to shift gears and focus more on Boomers and Gen X, who love good old-fashioned customer service and want to feel connected to the younger crowd. These older generations aren’t just about keeping up with trends; they’re keen on connecting with younger folks and finding common ground. This creates a sweet spot where retail can hit the mark for everyone.

Can Retail Be a Spot for All Ages?

Department stores, once the go-to for Boomers, are now facing an identity crisis as they try to woo younger shoppers. This trend-chasing can leave Boomers—their most loyal customers—feeling left out. There’s a big opportunity here for department stores to circle back to their roots and focus on what Boomers really value: great service and a personal touch. Instead of only chasing the latest fads, they can double down on reliability and customer care, things that Boomers have always appreciated.

Katz also pointed out that open-air shopping centers, especially those with grocery stores as anchors, are doing a great job of pulling in both Millennials and Boomers. These spots aren’t just for shopping; they’re places where people can work, hang out, and socialize, which makes them appealing across the board.

Dining Out: A Universal Experience

When it comes to dining, the landscape is shifting too. Fast-casual spots like Chipotle and Shake Shack are taking over from casual dining, alongside more upscale dining experiences. Despite these changes, restaurants are here to stay because they offer something everyone loves—a social, enjoyable experience. Great food and a welcoming atmosphere make dining out a hit with both younger and older generations. Katz noted a growing trend of people choosing ready-made Thanksgiving meals, highlighting a desire for convenience. More folks want experiences that cut out the hassle (no cooking or cleanup) so they can spend more quality time with family and friends.

The Outlook for Real Estate Investors

Looking ahead, Katz sees a lot of potential for real estate investors. Over the next five years, retail spaces that can adapt to serve multiple demographics will be well-positioned for success. As America ages, new opportunities are emerging. Investors should look for retail centers that specialize in experiences appealing to both younger and older generations, creating spaces where everyone can find something to enjoy.

In the next 10-15 years, as generations stay more active, they will seek out retail centers that offer engaging activities. These places will need to provide more than just shopping—they’ll need to be destinations for fun and connection. Real estate investors who focus on creating vibrant, multi-purpose spaces that cater to these evolving needs will be at the forefront of retail’s next big wave. By embracing specialization that attracts a broad audience, investors can unlock significant value and ensure long-term success in the retail landscape.