Remote Work Has Retailers Moving to the ’Burbs

Available downtown retail space is greater than available suburban retail space—a first since at least 2013.

May 10, 2023

ALEXANDRIA, Va.—More retailers are moving their businesses to the suburbs, as the daily commute into downtowns continues to lag compared to before the pandemic, reports The Wall Street Journal. Foot traffic in downtown areas was down 25% in April compared to April 2019, while office usage rates are only around half of what they were before the COVID-19 pandemic.

“I think we’re in for quite a challenging time for downtowns and for retail in downtowns,” Diane Wehrle, marketing and insights director for MRI Springboard, told the Journal.

Many restaurant chains are abandoning some downtown locations while opening more locations in the suburbs, including Sweetgreen. The salad chain closed several locations in Los Angeles, Boston and New York City last year, and as of last summer, half of Sweetgreen’s footprint was in the suburbs, up from 35% at the end of 2019.

Landlords in suburban areas are reporting strong demand from retailers. Shopping-center owner Site Centers reported record-high leasing in the first quarter, while owner Phillips Edison reported a new high for occupancy. Retail Opportunity Investments Corp. said its portfolio is more than 98% leased. Simon Property Group, which leases space at shopping malls, said foot traffic is up this year over 2022, while overall occupancy was at 94.4% in the first quarter of this year, which is slightly lower than pre-pandemic levels.

Last year, the amount of available space for downtown retail was greater than available suburban retail space—a first since at least 2013.

“You’re seeing retailers of all types look to go to some of these suburban centers,” retail analyst Dana Telsey, who runs Telsey Advisory Group, told the Journal.

One example is Dig, a QSR, which mostly catered to the office lunch crowd pre-pandemic in Manhattan, Boston and Philadelphia. However, once workers shifted to remote work, it closed a few restaurants in New York, and now Dig is opening restaurants primarily in the suburbs and residential areas in larger cities increase of office districts.

“There is a permanent part of the work base that’s never going to return to the office five days a week,” Dig CEO Tracy Kim said to the Wall Street Journal. “We just want to be where the mouths are, whether they’re at home or in the office.”