Six Ways to Fill a Strip Mall

The recession took its toll on strip malls nationwide as retailers downsized or went out of business. Luckily, IBISWorld senior analyst Agata Kaczanowska says the recent rise in credit access is slowly encouraging retailers to open additional locations in strip malls while interest rates stay low. Small businesses are the bulk of activity; many big chains are downsizing, leaving spaces open and pushing rental rates down to where small retailers can afford them. These groups are particularly attractive because they often grow more quickly than well-established chains. Agata broke down six industries slated to expand quickly over the next five years that can fill your shopping center.

1. Real Estate Agencies

Pent-up demand for residential and commercial real estate will drive an influx of real estate agency franchises; Agata estimates this group will add 9,254 locations (5.2% expansion annually) and post 5.5% annualized revenue growth in the next five years.

2. Lumber and Building Materials Stores

The return of real estate will also drive activity from lumber and building materials stores. (Not to mention America's ever-more complex children's tree houses.) Agata believes the industry will add nearly 10,000 stores (3.6% annually) and grow revenue 4.5% annually through 2018.

3. Single Location Full ServiceRestaurants

An increase in consumer spending is boosting our next four industries. Single-location restaurants are projected to add 12,663 locations (1.3% growth) and 2.7% annualized revenue in the next five years. Agata says the industrys profitability is increasing thanks to new technology making restaurant operations run more efficiently. (Did she mean robot waiters? We were too scared to ask.)

4.Pizzerias

Agata separates pizza restaurants from the previous category because theyre typically take-out or more than single locations. This sector is forecast to add 12,000 locationsor 3% annual growthand boost revenue 2.7% each year through 2018. She does offer a warning; pizzerias will have to contend with rising competition from other food outlets and the push toward healthier eating. That said, pizza restaurants are slightly more profitable than single-location full-service restaurants.

5.Jewelry Stores

Agata says Jewelry store operators are particularly attracted to strip malls because theyre typically well lit and provide additional security. And with luxury spending jumping, this industry is forecast to enjoy fast-paced profit increases, making them a low-risk tenant. She projects 7,046 new locations (a 2.3% bump) in the next five years and 2.4% annual revenue growth.

6.Health Stores

Rising demand for dietary supplements, emergence of healthcare legislation, and our aging population will boost demand in the health stores industry. Its slated to add 5,769 locations (1.9%) and grow revenue 2.5% by 2018.

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