Artificial intelligence is forcing a fundamental rethink of retail real estate development, as landlords and retailers increasingly find that technology can no longer be layered onto stores after construction but must be built into projects from the outset. Most importantly — this investment is giving them a competitive advantage in the sector over bottom lines.
According to a new report from Colliers, the rise of AI-driven shopping, fulfillment operations and real-time inventory systems is reshaping what retailers need from physical space. Stores are evolving beyond traditional merchandising environments into hybrid retail and logistics hubs that require significantly more connectivity, computing power and operational infrastructure than legacy properties were designed to support.
That shift is changing how retail assets are planned and built. New developments increasingly require integrated 5G connectivity, fulfillment-dedicated staging areas, embedded sensors, edge computing systems and AI-ready data architecture from day one. Retailers and developers who delay those investments may face significantly higher retrofit costs later as operational requirements intensify.
Colliers found that retailers currently using 5G at the store level are seeing 71% higher profit growth compared to those foregoing the network, underscoring how connectivity infrastructure is becoming tied directly to operational performance.
"In-store technology has a history of being underestimated," said Anjee Solanki, national director of U.S. retail services and practice groups at Colliers.
"The pattern is repeating, but the cost of delay is steeper this time because retailers now require fulfillment-grade infrastructure and integrated data systems that cannot simply be added later."
The operational demands are being driven by changing consumer behavior and the growing integration of AI into shopping decisions. Nearly half of shoppers now use AI for product recommendations, while roughly three-quarters say AI significantly influences purchasing decisions. At the same time, stores are becoming increasingly important to retailers' fulfillment networks.
One in four online orders is now fulfilled through a physical store, with that share expected to rise to more than 35% by 2030.
Buy Online Pickup in Store (BOPIS) also continues to expand, accounting for about 9% of retail revenue, though only 18% of retailers say they have fully optimized the process. The growing complexity of fulfillment operations is pushing retailers to prioritize properties that can support rapid inventory visibility, seamless connectivity and real-time logistics coordination.
The investment gap between early adopters and slower-moving competitors is widening. Colliers found that retailers leading in AI adoption have increased IT spending by 52% over the past five years and are expected to generate profit growth nearly three times faster than peers that have increased spending by just 13%.
Early adopters of in-store AI are also reporting 79% higher store sales growth and 34% stronger BOPIS performance.
For landlords, the implications increasingly reach the bottom line. Technology-enabled retail properties are emerging as more competitive leasing environments while also creating new ancillary revenue opportunities tied to digital advertising systems, connectivity infrastructure and data-driven operations.
As AI reshapes how retailers operate, the distinction between properties designed for those systems and those attempting to retrofit into them is becoming increasingly pronounced.
"Every square inch is so valuable — and the landlords who treat their properties as technology-enabled platforms, not just leased space, will be the ones who prove it on their balance sheets," said Nicole Larson, senior manager, national retail research, at Colliers.
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