How Remote Work is Transforming Neighborhood Centers
The landscape of American life has undergone significant transformations in recent years, with the COVID-19 pandemic accelerating changes that may have otherwise taken decades to materialize. Among these changes, the rise of remote work stands out as a particularly enduring shift, fundamentally altering how suburban communities interact with their local neighborhood centers.
A dramatic increase in remote-work opportunities has been observed, with a LinkedIn study revealing that 20% of job postings in April 2022 offered the option to work from home—double the percentage from January 2021. Before the pandemic, remote work options were relatively rare, offered by only 3% to 5% of employers. This shift towards home-based work has had a considerable impact on the functionality and visitation patterns of neighborhood centers, pushing towards more diverse and convenient service offerings.
The adaptation of neighborhood centers to meet these changing needs has been pronounced. For example, medical retail—or “medtail”—is expanding rapidly within these community hubs. This category includes urgent care centers, veterinary clinics, physical therapy offices, dentists, spas, stretch studios, and even cryotherapy services, all competing for space. This trend underscores a growing desire among suburban dwellers for closer access to essential services, facilitated by the hybrid work model that continues to gain traction.
Traffic data indicates an increase in visitation to neighborhood centers, particularly those anchored by grocery stores, with households making an average of 1.6 visits per week. Notably, food and dining visits have spread across all dayparts, driven by both national chains and local eateries seeking to capitalize on the suburban market’s growth potential.
As one of the retail real estate sector’s leading companies, with a portfolio-wide occupancy rate of 97.4% by the end of 2023, companies like Phillips Edison & Company (PECO) are experiencing a boon. This success is attributed not only to the increased reliance of suburbanites on local centers for their daily needs but also to a historic decline in the construction of new retail spaces. This scarcity of new developments has boosted the value and utility of existing neighborhood centers, making them more critical than ever to the fabric of suburban life.
PECO, which owns and operates over 300 centers across the nation, has been proactive in accommodating the evolving demands of both tenants and consumers. By fostering strong relationships with national chains and adapting to the changing needs of the market, PECO has been instrumental in bringing a wide array of services closer to suburban communities. This approach has not only supported national retailers in their expansion efforts but has also ensured that neighborhood centers remain vibrant, essential parts of their communities.
The pandemic-induced migration towards suburban living, coupled with the shift towards hybrid working models, has ignited a resurgence in suburbia. This revival has positively impacted various sectors, from retail to dining, and positions companies like PECO to continue their growth trajectory well into the future. As we look ahead, the demand for well-positioned, service-rich neighborhood centers is expected to remain strong, reflecting the ongoing evolution of American suburban life in the post-pandemic world.
