2025
FINANCIAL REVIEW & FORECAST
2026
Right-Sizing Retail
Northeast Ohio’s market adapts to consumer behavior + e-commerce pressure By Vince Mingo CBRE
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ortheast Ohio’s retail real estate market is currently navigating a dynamic period of change from both local economic influence and a national shift in how retailers operate, providing both challenges and opportunity for landlords and tenants. The sector faces pressures from shifting consumer preferences and changes in retailers’ ideal store size. One of the most significant factors that local and national retailers are facing is the continued impact of online shopping but understanding the consumer need to experience retail. The convenience and price competitiveness of e-commerce giants has impacted foot traffic in traditional brick-and-mortar stores, leading to closures – particularly in larger shopping malls and big-box retail locations. However, many successful retailers have navigated the need for both physical locations and online delivery. This trend has accelerated in recent years, forcing retailers to re-evaluate their physical footprints and strategies. With retailers understanding consumer needs, the evolving nature of retail spaces is a key trend. In our market, a few national soft-good retailers have tried to adapt by creating a smaller footprint to still allow for the experience of retail but utilizing their online delivery platform to fulfill orders that may not be available with their smaller in-store inventory. A great example of this trend is the Market by Macy’s, which backfilled the 30,000-square-foot former Bed Bath and Beyond at The Promenade in Westlake. This exemplifies the shift from the large-scale department store to a curated neighborhood location. Despite the continued growth of online sales, trends within the retail banking sector provide a useful case study for evaluating the enduring relevance of brick-and-mortar locations. Many banks reduced the number of branches within the market in the last decade as online banking strongly impacted foot traffic. However, banks quickly have shifted away from this trend as they observed 40
that while customers may not utilize the branches the way they used to, the need remains to retain customers in that market. In Cleveland, we saw growth of new branches from the banking giants as the need for a brick and mortar presence is still needed. On a national scale, we have even seen some banks lean into larger footprints to entice consumers back into their locations with examples like Capital One Café. This trend in the banking world is a microcosm of the evershifting dynamic that soft good retailers are now navigating. As retailers evaluate their typical store footprint, this has created a need for landlords to adapt spaces to these trends with several big box vacancies being split into multiple units to capture the need for retailers in the 20,000- to 30,000-squarefoot size rather than the former 80,000- to 100,000-square-foot need. Meanwhile small shop space in the 1,000- to 3,000-square-foot range has been in very high demand, creating a landlord-friendly market with a sharp increase in market rents. So while landlords try to keep pace with retailers’ dynamic needs, it is important for the market to remain nimble as the macro-economic environment continues to shift.
It’s not only retailers who are evaluating their business model and store footprints. Restaurant operators are also doing so, as they continue to see a shift to quick service restaurants (QSR) and fast-food establishments. Both QSR and fast-food operators have continued to see growth, despite continued challenges with labor and rising food costs. With the continued growth, the tenant demand has created an extremely competitive market with record-low vacancy levels. Drivethrough restaurants continue to lead the way in demand as the restaurant industry continues to shift away from casual dining and rather towards quick service. This past year, we have seen closures from several casual dining chains but have seen numerous QSR and fastfood users enter our market. The heavy demand has led to an increase in occupancy costs for these users however, so it will be a trend to watch in 2026 as rents could potentially reach unattainable levels for operators’ potential sales volumes in the market. Northeast Ohio’s retail real estate market is in a state of transformation that is mirroring many markets across the country. While challenges persist from e-commerce and changing consumer behavior, the market has continued to adapt quickly and achieved record-low vacancy rates. The macro-economic factors will continue to drive change in our market as 2026 is sure to present its own challenges and opportunities. P Vince Mingo is vice president, retail with CBRE Cleveland. For more information, visit www.cbre.com. Properties | January 2026