Franchisors Get Creative With Real Estate to Reignite Their Development Pipelines

Two franchisees, Javier and Alejandro, are standing in front of a Batteries Plus store.

As many franchise systems are restarting their development pipelines, they’re discovering the Class A retail sites aren’t as readily available as expected. In the best locations and markets, space is extremely tight.

The U.S. retail vacancy rate fell to 4.8 percent in the first quarter of 2023, a new low, reported CBRE. Meanwhile, the development pipeline was “muted,” with record-low deliveries of 5.1 million square feet.

Many brands are pursuing the same real estate, and stiff competition is making it tough to secure prime locations. While systems have agreements signed for dozens and even hundreds of stores, they’re also facing other real estate challenges including higher rents, increasing construction costs and rising interest rates.

Growing brands, however, are pulling out all the stops to find creative solutions to expand despite challenges.

Gerardo Flores is chief development officer at Marco’s Pizza.
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