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San Diego-based wellness practitioner Kimberly Blair specializes in grief counseling and has noticed an increase in clients’ “screen fatigue.” So she decided to open a storefront location and offer more in-person sessions. When she began casting for the location, she discovered that there were many major options due to the abundant space in the shopping centre.
“I was able to negotiate a flexible lease term as well as a great monthly rent, which ensures better results for clients who need in-person support and for my business as a competitive advantage,” Blair said.
Nationwide, small businesses, including healthcare workers, yoga instructors and artists, are making it easier to secure key commercial spaces once out of reach. However, experts warn that opportunities for small businesses vary widely across geography.
According to a recent report from commercial real estate firm Cushman & Wakefield, national vacancy rates for shopping centres rose to 5.8% in the second quarter of 2025, up 20 basis points from the first quarter and 50 basis points from a year ago. The report shows overall softening of demand, putting pressure on rents, particularly including space in shopping centres. Although data at the peak of COVID closures was even weaker, the report concluded that tenants’ store closures and increased cost pressures are likely to further weaken rental growth in the next few quarters.
“Main Street opportunities are undoubtedly increasing for tenants who go beyond traditional retail models,” said Elizabeth LaFontaine, research director at Placer.ai, which monitors road traffic. Lafontaine said that they will open retail real estate in particularly booming markets with high consumer migration, Lafontaine said, adding that they are open to malls and local businesses.
Blair’s experience is not uncommon, according to Teresha Aird, co-founder and chief marketing officer of Real Estate Brokerage Offices.net. “We have seen a noticeable increase in small businesses that use vacancies in areas that were off limits for pricing,” Aird said, with some of the most intensely hit retail corridors, such as inner ring suburbs and medium-sized urban centers, seeing a reset.
“This has opened the door for independent retailers, fitness operators, especially service-based companies that were previously priced,” Aird says.
To be clear, vacancy is growing at strip malls, but rents are still rising. “Rental fees don’t usually go down,” said James Bohnaker, a senior economist and Cushman & Wakefield. “The rental rate is rising, but not the same rate,” he said, adding that post-covid, rental fees have risen by 4%, but are now close to 2%.
This is rising with rising rental rates and increasing availability creating openings for small businesses that want to expand into once-priceeded commercial real estate. “We’re seeing an increase in clinics and spas, and we’re seeing other uses that you’ve not normally seen,” Bohnaker said.
Cushman & Wakefield expects this trend to continue in the short term. “The market has been recalibrated a bit. So far, we’ve seen more store closures this year,” Bohnaker said.
And it will continue to open up opportunities for small businesses that want to move around.
Andy Lapointe, owner of Traverse Bay Farms, the owner of local gourmet food business, has two retail outlets in two strip malls in northern Michigan.
“What we found is when brands across the country get out of their prime spots, it’s not just about filling those spaces, but about rethinking it as an experience and destination that reflects the community,” Lapointe said.
“These spaces are already used to site selection reviews, pedestrians and locals watching their activities in the space. But the magic happens when small businesses bring something unique, a place to remain and a sense of belonging, rather than replacing cookie cutters,” Lapointe said. “So when chains across the country leave the space, it’s not just a gap, it’s a canvas for creating something that small local businesses continue.”
Close-up of Traverse Bay Farms Store in a tourist-style shopping mall.
Traverse Bay Farm
Similar to Blair’s lease experience, many small business owners have more favorable terms, including flexible lease lengths, partial fitouts and even periods of rent-free, according to Aird. Some SMEs who settle in prime new excavations have chosen a short, serviced or managed office setup that allows them to skip traditional long-term leases completely, test their location before fully committing, and draw a new balance between visibility and affordability that supports local revitalization.
“This kind of access was not on the tables of startups and small businesses three years ago in most metro areas. Now they make the most of their capital to test their physical presence without overexpanding it,” she said. She also notes that previously bustling commercial centres have partnered with landowners and local councils to occupy short-term leases, pop-up programs, or units and provide revenue sharing arrangements to reduce vacancies.
“The outcome can be a lifeline for entrepreneurs who navigate tough margins and competitive markets, as they are more flexible and opportunity-rich environments,” Aird says.
Marc Norman, an associate dean of the SPS Schack Institute of Real Estate at New York University, points out several variables that determine whether non-traditional businesses can secure a place occupied by expensive chains.
“Empty space sends a message that the place is struggling,” Norman said. This will open the door to independent, local-type businesses to reduce prices and keep the plaza active and bustling. “Consumers visiting these locations want to see the occupied space. They don’t want to walk through 15 empty spaces and see one or two occupied spaces,” Norman said. However, he added that strategic decisions for landlords vary. If the long-term goal of a shopping centre owner is to expire the lease and ultimately offload the property, you may be satisfied with the accumulation of vacant seats. “The decision may be that you want to empty retail space for sale,” Norman said.
Norman says many shopping centres are looking for coveted “credit tenants.” This is a chain that generally allows you to pay six months of rent in advance with a 5-7 year lease. However, these are increasingly rare and small businesses have the opportunity to move on more favorable terms if credit tenants are not able to score.
An empty shopping mall at Woodbridge. Virginia.
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When considering small tenants, landlords have many questions, calculations and risks.
“Will Mama and Pop sign a long lease?” Norman said.
Andrew Spatz, partner at the New York City law firm of Dorf Nelson & Zauderer, who specializes in commercial real estate and land use development, says small business opportunities are determined by geography. For example, New York City and its surrounding markets are “absolutely countering” the idea that small businesses can get better deals. Demands for warehouses, industry and microdistribution have increased the value of vacant space.
Still, there is an opportunity in other communities where big box stores have failed and data centers don’t hold demand. “It absolutely creates opportunities for small businesses to thrive, but only if the landlord offers a manageable lease rather than an essentially ‘triple net’,” says Spatz.
Jacob Knieg, a real estate broker and real estate rehabilitation in Des Moines, Iowa, said landlords in his area generally don’t want to empty space.
“In West Des Moines, a family-run restaurant recently envisioned an old chain pizzeria location with rent less than 30% of the original rental,” Nigue said. “A transaction like this would have been impossible just five years ago,” Nigue said.
Nevertheless, according to Glenbril, managing director of Real Estate Solutions Practice at FTI Consulting, the high failure rates for small businesses are always a problem for landlords.
“Given the risk of small businesses failing, many landlords are willing to wait for the right tenants to pay at full market rates rather than giving them space at the first chance,” Brill said, adding that for most small businesses, the best opportunities are not empty big boxes, not smaller strip centres.
Still, the conditions must be just right.
“Strip malls with small stores offer more opportunities for small businesses, but if the local economic situation is sick as vacancy increases, lower rental fees may not be enough incentive to open up small retailers,” Brill said.
