Large national retailers are seeing tenant demand decline in secondary markets such as Wausau, Wisconsin. Smaller, locally rooted businesses with five to twenty locations are capturing lease opportunities that major chains once dominated. Devan Dorzok, licensed real estate salesperson at NAI Pfefferle, attributes this change to local businesses’ ability to build personal relationships and connect with their communities. These are advantages that national retailers cannot match at scale. As a result, the types of tenants leasing retail space, the price points they command, and the strategies landlords use to attract tenants are all changing.
“A lot of the big retailers are the ones going quiet right now,” Dorzok says. He notes that businesses with one to ten sites are now dominating the market for retail leases in secondary cities.
This trend is most visible in retail categories where local operators stand out through customer service, community engagement, and brand identity tied to specific regions. Coffee shops, specialty retailers, and food service businesses are among the sectors where local businesses are gaining ground. For property owners, this means that the traditional benefits of leasing to national chains — brand recognition, financial stability, and standardized operations — are no longer enough to ensure strong tenant demand in smaller markets.
Local Ties Drive Lease Wins
According to Dorzok, local businesses are winning leases because they offer a level of personal attention that national retailers cannot replicate. In secondary markets, community ties and local identity carry more weight than in large metropolitan areas. Personal connection is now a key competitive advantage.
“Local support is going to those businesses because they can compete on a more personal level,” Dorzok says. Large retailers have lost their edge in these markets because their scale makes it difficult to maintain close customer relationships.
This advantage is especially clear in categories like coffee shops. Many of these businesses are no longer single-location operations. They are growing into regional players with five, ten, or even twenty locations. These operators have enough scale to compete on price and convenience while retaining a local identity that keeps customers loyal.
As local operators expand, they attract increasing community support. “They’re starting to see a trend where a lot of local support is going to those businesses,” Dorzok says.
National retailers are losing out on leases for smaller spaces, typically under 10,000 square feet, where local operators can thrive. For landlords, the tenant pool is shifting away from large, credit-rated national chains toward smaller, locally focused businesses. These tenants often require different lease terms and more hands-on management.
Landlords Rethink Tenant Strategy
This shift toward local tenants is forcing landlords to reconsider their approach to tenant mix and lease negotiations. National retailers have typically offered longer lease terms, stronger credit profiles, and less intensive management. Local operators, by contrast, may seek shorter leases, more flexible terms, and greater landlord involvement.
Property owners who have relied on anchoring retail properties with national chains may find that approach less effective in secondary markets. Instead, they may need to build tenant mixes around local operators who can drive foot traffic and community engagement, even if these tenants do not carry the same financial strength as national brands.
Dorzok observes that national retailers are “starting to lose out to the local guys.” This suggests the trend is not a short-term response to market conditions but a deeper shift in consumer preferences, particularly in markets where local identity is valued over brand recognition.
For investors considering retail properties in secondary markets, this means reevaluating their assessment of tenant quality and lease stability. Properties leased to a mix of local operators may generate strong cash flow and high occupancy. However, they may also experience higher tenant turnover and require more active management than those leased to national chains.
Retail Dynamics Are Shifting
The growing presence of local tenants in secondary markets signals a broader change in retail. The traditional advantages of scale, including brand recognition, standardized operations, and financial stability, are becoming less important in places where personal connection and community engagement drive consumer behavior.
This pattern aligns with wider changes in consumer-business relationships in the post-pandemic economy. Local businesses that provide personalized service, community involvement, and a distinct regional identity are taking market share from national chains that rely primarily on price and convenience.
For brokers and property managers, this means identifying which tenant categories are most exposed to local competition and which national retailers are likely to retain market share. It also requires developing tenant-mix strategies tailored to specific markets and demographics, rather than assuming national chains are always the strongest option.
Dorzok’s work at NAI Pfefferle involves helping landlords adapt by identifying local operators with strong growth prospects and structuring leases that balance tenant flexibility with reliable landlord income.
Adapting to New Tenant Realities
The rise of local tenants in secondary markets is not a temporary reaction to economic cycles. It marks a lasting change in how businesses compete for customers and how consumers decide where to spend their money. Landlords, investors, and brokers need to adjust their tenant-mix strategies, lease structures, and management practices to align with a market where local operators are increasingly the primary drivers of demand.
Those who recognize and respond to this shift are likely to secure stronger occupancy and more resilient income streams. Those who rely on outdated assumptions about national chains may struggle to fill space. As secondary markets continue to evolve, the competitive advantage will belong to property owners and managers who understand the local context and build tenant rosters that reflect the new realities of retail demand.
