Small Format Retail: How to Attract and Support Emerging Retail Concepts

Big isn’t always better—especially in today’s evolving retail landscape. A growing wave of emerging brands is choosing to go small, seeking flexible, community-friendly spaces in suburban and secondary markets. For landlords, this shift is both a challenge and an opportunity. Traditional shopping centers built around large anchors must now adapt to accommodate retail concepts that operate on a smaller footprint, move faster, and expect more flexibility.

Here’s how landlords can rethink their properties, leases, and partnerships to attract the next generation of retail tenants.

The Rise of Small Format Retail

In recent years, digitally native brands and niche retailers have embraced brick-and-mortar as a powerful way to drive brand engagement and revenue—but they’re doing it differently.

Small format concepts—typically under 3,000 square feet—are thriving. From Warby Parker and Allbirds to local gourmet markets and wellness boutiques, these brands prioritize high-touch, curated experiences over massive inventory. Their expansion strategies center on walkable, community-centric locations and efficient store footprints that align with modern shopping habits.

CBRE reports that small-format concepts are fueling retail growth, particularly in dense suburban clusters where rent growth is outpacing national averages and availability remains low.

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Why Legacy Centers Are Missing the Mark

Many shopping centers were designed for a different era. Spaces exceeding 10,000 square feet dominate the layout. Lease structures favor long-term, national tenants. Shared amenities are minimal or non-existent. As a result, properties often struggle to attract or retain modern retail brands looking for something more agile.

Without reconfiguration, these properties can feel inaccessible to small-format retailers—not because of location or demand, but because of inflexible infrastructure.

Outdated leasing policies, limited suite sizes, and a lack of flexibility make it difficult for small retailers to even consider suburban centers as viable options.

Reconfiguring Physical Space to Support Smaller Retailers

Adapting your property doesn’t always mean expensive overhauls. Small changes in configuration and layout can dramatically increase leasing potential:

• Subdivide large, underused spaces to create 1,000–2,000 sq ft retail suites.
• Use demising walls or modular buildouts to create reconfigurable layouts.
• Convert outdoor areas into seasonal retail kiosks, patios, or curbside activation zones.
• Introduce shared amenities, such as loading docks, storage, and customer facilities, to support multiple small tenants efficiently.

These physical upgrades aren’t just about aesthetics—they’re about removing friction. When a property feels move-in ready for small concepts, landlords instantly broaden their prospect pool.

Rethinking Leasing Strategies for Emerging Brands

For many of these retailers, the typical 10-year lease structure is a nonstarter. They seek flexibility, support, and incentives to de-risk entry into physical space. Landlords who embrace this mindset can structure more attractive deals by offering:

• Shorter initial terms (e.g., 12–36 months) with renewal or expansion options.
• Performance-based rent models, such as base rent plus a percentage of sales.
• Turnkey white-box delivery, so brands can open quickly with minimal buildout delays.
• Graduated rent tiers, allowing startups to scale occupancy costs in line with revenue.

These strategies also give landlords upside. Shorter leases let you adapt more easily to market conditions and re-tenant underperforming spaces faster.

Support Services that Boost Tenant Success

Attracting the right tenant is only the first step. Supporting them—especially in their early stages—can turn a small lease into a long-term win. Consider how your property can offer:

• Marketing support, including social media promotion, center-wide events, or digital foot traffic campaigns.
• Retail data sharing, such as shopper insights, traffic analytics, or seasonal forecasts to help tenants plan inventory and staffing.
• Access to local partnerships, chambers of commerce, or business mentorship programs that position your center as a retail-friendly hub.

Leveraging Pop-Up Retail to Build Momentum

Some landlords are even using short-term pop-ups as a low-risk way to test tenant concepts. When structured well, these pilot tenants become permanent occupants.

An estimated $10 billion in annual sales went through pop-up experiences by 2016, and the trend has only grown. Retail investors are now using pop-ups to test tenant concepts, gather data, and boost foot traffic. Once a concept proves successful, landlords can offer permanent lease terms.

‍Case in point: In Chicago’s Fulton Market, vacant storefronts were activated with pop-up installations—such as The North Face x Gucci—transforming underutilized space into high-impact retail experiences and paving the way for longer-term tenancy.

Final Thoughts: It’s Time to Build the Right Kind of Scale

Supporting small format retail isn’t about shrinking your ambition—it’s about scaling smarter. These emerging concepts are often nimble, community-focused, and highly attuned to consumer preferences. For landlords, they represent a new path to vibrancy, one square foot at a time.

By adapting your physical space, updating your lease strategy, and supporting your tenants with tools to succeed, your property can thrive—even without a traditional anchor tenant.

Key Takeaways for Landlords

🔹 Reconfigure existing space to offer more 1,000–2,500 sq ft units
🔹 Embrace flexible lease terms and tenant improvement support
🔹 Position your property as a launchpad for next-gen brands
🔹 Invest in amenities and shared resources that make your center small-brand-friendly
🔹 Build long-term value by helping these brands grow into anchor-worthy tenants

Schedule a Strategy Consultation to explore how your center can adapt to the small format retail opportunity.

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