The pandemic years triggered a surge in entrepreneurship across the United States, driven by economic shifts and fiscal policies like the American Rescue Plan. This wave of change is evident in the nearly 25% increase in new business applications—or requests for an IRS Employer Identification Number—during 2020 and 2021.
Retail and Consumer-Facing Sectors Lead the Charge
The accommodation, food service, and retail sectors saw the most significant clustering of new business applications. Many of these ventures translated into consumer-facing businesses, contributing to the scarcity of available spaces in strip malls and neighborhood retail centers today.
This tightening of the retail market highlights the direct link between entrepreneurial activity and commercial real estate demand. As new businesses entered the market, the competition for prime retail spaces increased, making space availability a key challenge for many operators.
Business Churn: The Other Side of the Story
Not all new businesses survived, however. According to the Business Dynamics Statistics (BDS), a survey tracking establishments over time, there was a notable uptick in business failures in 2021, the most recent period with available data. This rise in closures can be attributed to challenges such as evolving consumer behaviors and the impact of social distancing measures during the pandemic.
When viewed together, the new business applications and BDS data reveal a dynamic landscape marked by substantial churn. While many new firms have succeeded, others have exited the market, showcasing the resilience and volatility of the entrepreneurial ecosystem.
Key Takeaways for CRE Professionals
Understanding the connection between new business trends and commercial space demand is crucial for navigating today’s tight retail market. Strip malls and neighborhood retail centers remain pivotal hubs for emerging businesses, but securing and maintaining these spaces requires strategic insights into market dynamics.
For commercial real estate professionals, telling the story behind these trends is key to connecting with investors and clients. That’s where VidTech.com comes in.
VidTech.com creates impactful CRE videos that combine 4K drone footage, satellite imagery, and data overlays to illustrate market trends and property opportunities with precision. Our videos empower real estate teams to captivate their audiences, showcase insights, and close deals faster.
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