Investing in Resilience: Why Experiential and Necessity Retail Centers Stand Strong
The headlines regarding retail real estate often sound grim, portraying a sector in crisis. However, this narrative misses the mark on an important reality where significant opportunities remain within this space. Amid ongoing transformations in the sector, two subcategories of retail properties consistently demonstrate remarkable resilience and profitability for investors. Necessity-driven retail centers meet unchanging consumer needs, while experiential retail taps into the irreplaceable human desire for connection. Together, these centers form a foundation of opportunity that sharp investors would be remiss to overlook.
As of April 2025, necessity and experiential retail real estate continue to attract attention for a good reason. If your portfolio skews toward stability and strategic growth, here's why these properties deserve a spot in your investment strategy.
The Unshakeable Demand for Necessities
We all know the staples of weekly life. From grocery shopping to quick pharmacy visits, these errands form the backbone of what necessity retail centers offer. Centers anchored by supermarkets, pharmacies, financial services, and basic goods are integral to daily life. Unlike other forms of retail, these transactions remain consistent regardless of economic ups and downs, giving this segment an unmatched level of reliability.
Why Necessity Retail Endures
No matter how far e-commerce expands, there are certain essentials that consumers prefer to buy in person. Fresh produce is best inspected by hand, prescriptions require immediacy, and a haircut can't be delivered by drone. Necessity-focused retail survives because it fulfills inherently “internet-resistant” needs.
The Investment Case
From a financial perspective, necessity retail centers carry distinct advantages:
Consistent Foot Traffic: Anchored by major retailers, these centers enjoy steady consumer visits, translating to reliable revenues for tenants.
Stable Tenants: National supermarket chains or pharmacies are typically strong, credit-worthy tenants with long-term leases, reducing vacancy risks.
Defensive in Nature: During economic downturns, people may cut back on discretionary spending, but necessities remain non-negotiable.
These factors make necessity retail a key pillar for investors focused on cash flow and stability.
The Irreplaceable Value of Experiences
On the flip side of the spectrum is experiential retail, where the emphasis shifts from what people need to what they want. The pandemic may have fueled online shopping, but it also underscored something e-commerce cannot replicate: vibrant, in-person experiences.
Experiential retail centers thrive by delivering human connection, entertainment, and memorable moments. Whether it’s a family dinner at a trendy restaurant, the energy of a fitness class, or the thrill of bowling alleys and movie theaters, these communal spaces draw people in.
Why Experiential Retail Thrives
Humans are fundamentally social beings. While online platforms dominate convenience, they quickly fall short when it comes to the emotional satisfaction of shared experiences. Experiential centers tap into this, creating immersive environments that cannot be simply replaced by a screen.
The Investment Case
Experiential retail centers are more than entertainment zones; they’re strategic assets offering unique long-term value:
Higher Engagement: Guests stay longer and spend more when surrounding amenities—from restaurants to boutique boutiques to live events—enhance their experience.
Strong Tenant Ecosystem: The diverse mix of dining, fitness, and entertainment tenants fosters synergy, ensuring foot traffic benefits all occupants.
Shift to Experiences Over Products: According to a Deloitte survey, 57% of Millennials stated they’d rather spend money on experiences than on material goods. Investors tapping this demand are positioning themselves in a growth-oriented space.
Location, Location, Experience!
A critical factor underpinning the success of necessity and experiential retail is location. However, in this context, "well-located" means more than just being on a busy street. It involves three key elements:
Visibility and Accessibility: Locations must be easy to see and reach, ensuring convenience for nearby communities.
Strong Demographics: Centers thrive in areas with healthy population growth, robust household incomes, and active consumer bases.
Community Integration: Centers become focal points for neighborhoods, providing both utility (necessity) and enjoyment (experience).
Investors can spot opportunity by targeting properties that leverage these factors to attract loyal visitors and achieve consistent sales.
Why Necessity and Experiential Retail Shine in 2025
The commercial real estate landscape is evolving rapidly, but necessity and experiential centers stand apart for their resilience. Here’s why they remain smart investments in today’s market:
Stable Cash Flow: Anchored tenants with strong sales performance ensure reliable rental income streams.
Lower Volatility: Unlike offices or apparel-based retail, these centers cater to universal and timeless consumer drivers, reducing risk exposure.
Defensive Characteristics: By serving essential needs or creating lasting memories, these assets weather economic downturns better than other sectors.
Longevity: Purpose-driven design and strategic tenant relationships help these centers remain relevant, sustaining long-term value growth.
For comparison, sectors like office space currently grapple with reduced demand as hybrid work becomes normalized. Conversely, necessity and experiential properties thrive by fulfilling needs and desires unique to their physical spaces.
Spotting Opportunities and Acting Strategically
Investing in retail real estate doesn’t have to mean betting against the odds. By targeting well-located centers rooted in necessity or experiential offerings, you tap into growing demand while mitigating risk.
The key is foresight. Retailers and their landlords are increasingly focusing on creating hubs that do more than sell products; they foster connection, convenience, and community. For real estate investors, this translates to resilient cash flow, minimal vacancy rates, and sustained value over time.
Resilience Delivers Competitive Advantage
Retail real estate isn’t dead. It’s evolving, and necessity and experiential retail centers exemplify this new paradigm. These spaces meet enduring human demands while adapting to shifting consumer preferences, positioning investors for steady and compelling returns.
Don’t get lost in the broad, negative retail narrative. The key is to seek opportunity in specificity. With strategically located assets, forward-thinking investor portfolios can thrive in 2025 and beyond.
Partner with the Las Vegas Retail Experts
As specialists in the Las Vegas commercial real estate market, VAC Development is actively identifying and creating high-performing necessity and experiential retail centers. If you're interested in discussing investment or development opportunities in this resilient sector, contact the VAC Development team today to explore how we can help you achieve your goals.