Lenders need to change the way that they valuate retail properties, particularly malls, to adapt to the changing retail landscape. A recent CBRE survey looked at how retailers will operate in 2030, and found that integration of online and brick-and-mortar platforms and tailored customer experiences would be crucial to the success of retailers in the year 2030—nearly a decade away. The report named eight major trends in retail that highlight the changing market, and among them is pop-up and other alternative leases.

As pop-up leases—short-term retail leases usually focused on hyper trendy and experience-forward brands—become more common, lenders and landlords will need to shift the way that retail is valuated. “It has to, especially in retail segments like malls,” Melina Cordero, head of retail research for the Americas at CBRE and one of the authors of the report, tells GlobeSt.com. “There needs to be a fundamental shift in how we value malls and how we measure their performance.”

Capital sources will need to evolve sooner than later. Retailers are already analyzing their individual stores differently as consumers prefer to purchased goods online. “If you go down to the root, retailers have had to do that as well,” Cordero. “The traditional way that a retailer would assess the performance of a store is by sales per square foot and conversion, as well as occupancy ratios, so the ratio of sales to rent. That is becoming more and more obsolete as transactions shift online. If retailers are shifting how they are measuring their store performance, fundamentally, landlords have to do the same. If they are setting rent levels on sales per square foot, that isn't going to work if all of the sales are shifting online.”

Although ecommerce sales are growing, brick-and-mortar retail is still essential to retailers, so don't expect it to disappear. Instead, physical store sales are being analyzed differently, while there remains a clear benefit to having a brick-and-mortar presence. “Stores are still recognized as a branding tool, showroom or loyalty or experience space,” explains Cordero. “The store's goal is shifting from generating transactions to something that is harder to measure. There needs to be a shift in how we measure sales performance and then how we valuate the properties.”

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Lenders Need to Change the Way the Value Retail

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