M Square Commercial tracks specialty beverage category growth as drive-through formats proliferate
Retail expansion patterns shifted notably in 2025 as beverage-focused concepts accelerated openings across multiple markets. Coffee chains continue traditional growth trajectories, but tea specialists, sparkling soda retailers, and other specialty beverage operators now compete for prime drive-through locations previously dominated by quick-service restaurants.
Brittany Megrath of M Square Commercial observes this evolution through their client’s active development pipeline spanning New Jersey, Pennsylvania, Southern Louisiana and other southeastern markets.
The beverage category expansion extends beyond coffee into previously niche segments. Drive-through tea concepts occupy freestanding locations offering extensive tea selections. Sparkling soda shops provide flavored beverages alongside limited snack menus. These operators pursue small footprints with high-volume drive-through service creating revenue density that supports premium rents.
“We’re seeing tea concepts pop up where it’s a free standing drive through business that offers an assortment of teas,” Megrath explains. “We’re seeing other beverages that are sparkling sodas, different flavors, and then they’ll come with a small menu of snacks as an ancillary service.”
Small Footprints Enable Multi-Tenant Economics
Shrinking tenant footprints coincide with developer interest in multi-tenant properties that split costs across multiple concepts. Land prices, construction expenses, and capital costs all increased simultaneously, making single-tenant economics increasingly challenging. Developers respond by pursuing larger parcels accommodating two tenants sharing infrastructure investments.
Recent M Square transactions demonstrate this diversity across tenant categories. Dutch Bros – with a roughly 1,000 sf building, 7 Brew coffee is on track to open two additional locations in Southern Louisiana this year, with a prototype building less than 600 sf in size. New projects are being planned for development with concepts commonly known as freestanding moving towards end cap drive-thrus and multi-tenant buildings.
“You’re splitting the purchase price between two tenants. You’re splitting site work between two tenants, and that makes the numbers look a little bit friendlier and a little bit easier to get across the finish line when you start talking rents with some of these tenants,” Megrath notes.
The strategy requires identifying compatible tenant combinations without competitive conflicts. Beverage concepts pair effectively with personal services, specialty retail, or complementary food offerings. Fitness facilities work alongside professional services or quick-service restaurants serving different daypart patterns.
Lease Extension Activity Signals Tenant Stability
M Square recently completed multiple lease extensions demonstrating tenant retention in established locations. Ohlala French Bistro extended for five years in Las Vegas’s Rampart Plaza, covering 1,993 square feet under NNN lease terms. Shepherd Eye similarly extended for 10 years across 7,100 square feet in Rampart Plaza.
These extensions occur as developers face increased pressure to maintain occupancy amid rising operating costs. Tenants choosing to extend rather than relocate signal satisfaction with location performance and landlord relationships. The transactions also reflect tenant reluctance to absorb relocation costs and tenant improvement expenses in uncertain economic conditions.
Extension activity provides landlords stability through guaranteed cash flow continuation while avoiding vacancy periods and re-leasing costs. For tenants, extensions offer certainty around occupancy costs and avoid disruption to established customer bases. Both parties benefit from negotiated terms reflecting current market conditions without competitive bidding dynamics.
Southeast Market Competition Intensifies
Geographic preferences among M Square’s developer clients show strong consistency around southeastern target markets driven by residential expansion, favorable tax structures, and comparatively attractive land pricing.
Florida particularly demonstrates strong investment appetite, with properties trading 75 basis points higher than comparable assets in other markets. Tax incentives contribute to this premium alongside population growth and diversified economic development. Competition for available land increases as more developers pursue limited opportunities in high-growth corridors.
“A lot of people want to be in the southeast right now,” Megrath observes. “That has also increased competition. You’re negotiating against different parties for the same piece of property.”
Retail development follows residential growth patterns as population increases drive service demand. Grocery stores, pharmacies, quick-service restaurants, car washes, urgent care facilities, and gas stations all expand in growing markets. Industrial development additionally fuels demand for large-format travel centers serving trucking operations along distribution corridors.
The residential-to-retail sequence creates timing considerations for developers. Properties located in early residential development phases face extended absorption periods before population density supports retail viability. Developers entering established growth corridors encounter higher land costs but faster stabilization timelines.
Interest Rate Dynamics Shape Development Activity
Development activity responds to interest rate adjustments through project economics and deal structuring rather than simple transaction volume changes. Rate decreases improve project feasibility by reducing capital costs, but simultaneously increase competition for available land. Higher demand drives purchase prices upward, potentially offsetting financing cost savings.
“As interest rates drop, demand increases, then there’s a lot more activity on the supply,” Megrath explains. “I think it’s always good to just sort of act in the moment and try to figure it out.”
Private credit gained market share throughout 2024-2025 as traditional lenders tightened commercial real estate lending standards. Recent months show banks attempting to recapture market share by competing more aggressively on terms and pricing. This competition benefits developers by expanding financing options and potentially improving overall capital access.
Year-end activity acceleration reflects tax planning opportunities rather than financing conditions. Investment sales increase in fourth quarters as buyers leverage bonus depreciation and 1031 exchange timing. Development contracts operate independently from calendar considerations because projects rarely reach completion within tax year boundaries.
M Square’s transaction volume targets approximately 30-40 annual deals across development, tenant representation, and investment sales activities. Recent closings span multiple property types including retail, fitness, food service, and professional services across Nevada, Georgia, and additional markets.
About M Square Commercial
M Square Commercial provides development services, tenant representation, and investment sales advisory for retail and service-oriented commercial properties. Brittany Megrath leads the firm’s development and leasing activities serving national and regional retail concepts pursuing expansion opportunities across growth markets.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
