Retail real estate in 2017 can be best described in two words: “in flux.”

Vacancies across the nation have risen as big-box retailers and department stores announced closures and the construction of new product simultaneously slowed. But experts agree that retail real estate’s fundamentals remain strong. Mall operators continue to adapt to the changing landscape, and high-traffic, urban metro markets remain the best-performing in the sector.

Lost in the conversation about retail’s bifurcation is the health of the strip mall — the under-100K SF red-headed step-sibling to luxury retail and the shopping mall.

Parkview Plaza, Chicago, Illinois

CBRE Senior Vice President Christian Williams said that the performance of inline strip centers is holding up exceptionally well, and is second to high street opportunities in performance.

The tenant mix in strip centers is a healthy mix of internet-resistant retailers and service-oriented tenants. Owners and managers of strip malls anchored by grocery stores are complementing their tenant mix with discount retailers, quick-service restaurant concepts, family entertainment options and smartphone shops. Strip malls are also benefiting from the decentralizing of medical campuses. As more hospital groups re-enter the neighborhoods where their patients live, outpatient clinics and specialized medical services such as physical therapy centers and MRI facilities have found homes in strip malls — a concept that Williams dubbed “medtail.”

CBRE Executive Vice President Richard Frolik adds that strip malls are increasingly popular with financial services firms, insurance companies and fitness retailers. With little new strip mall construction in progress, immediate demand from tenants has revitalized strip malls, especially those that were built 20 to 50 years ago.

“The populations around these centers have grown…