Mall, chain store decline moves local business up to real estate prime

Kimberly Blair, a San Diego-based wellness practitioner who specializes in grief counseling, noticed an uptick in “screen fatigue” among her clients, whom she had been counseling largely virtually.  So, she decided to open a storefront location and offer more in-person sessions. When she began casting about for locations, she found that there were many prime options because shopping center space was plentiful.

“I was able to negotiate a fantastic monthly rent, but also a flexible lease term. Which in turn secures better outcomes for my clients who need in-person support, and also for my business as a competitive advantage,” Blair said.

Across the country, small businesses, including health practitioners, yoga instructors, and artists, are finding it easier to secure prime commercial space that was once out of their reach. However, experts caution that the opportunities for small businesses vary largely by geography.

According to a recent report from commercial real estate firm Cushman & Wakefield, the national vacancy rate in shopping centers rose to 5.8% in the second quarter of 2025, a 20 basis point increase from Q1 and a 50 basis point increase from a year ago. The report indicates an overall softening of demand, which is leading to easing pressure on asking rents, including for shopping center space specifically. While the data during the peak of the Covid closures was even weaker, the increasing number of store closures and mounting cost pressures on tenants are likely to further dampen rent growth in the next several quarters, the report concluded. 

“Main Street opportunities are definitely on the rise for tenants beyond the traditional retail model,” said Elizabeth Lafontaine, director of research at Placer.ai, which monitors business foot traffic. Opening up retail real estate, especially in booming markets with high consumer migration, presents opportunities for independent retailers and boutiques, Lafontaine said, and she added that malls are also now more open to local businesses, especially if they are ones locally recognizable.

Blair’s experience is not uncommon, according to Teresha Aird, co-founder and chief marketing officer of real estate brokerage Offices.net. “We’ve seen a noticeable uptick in small businesses taking advantage of vacancies in areas that used to be off-limits due to pricing,” Aird said, adding that some of the hardest-hit retail corridors, like inner-ring suburbs and mid-sized city centers, are seeing a reset.

“That’s opened the door for independent retailers, fitness operators, and – in particular – service-based businesses, who were previously priced out,” Aird said. 

To be clear, while vacancies are growing in strip malls, the rents are still rising. “Typically, rental rates don’t go down,” said James Bohnaker, senior economist and Cushman & Wakefield. “The rental rates are going up, but not at the same rate of increase,” he said, adding that post…