The New ROI: How Commercial Retail Properties Are Rethinking Ancillary Revenue

The conversation in commercial real estate has shifted. It's no longer just about rent per square foot. It's about what every square foot , and every surface, can generate.

A recent ICSC feature  spotlighted the growing pressure on commercial real estate property owners and managers to unlock ancillary income streams from nontraditional sources including drones, EV chargers, pop-ups, and autonomous vehicle pickup zones. The article made something clear that experienced operators have quietly known for years: the physical real estate asset is dramatically under-monetized.

The Math That Changes the Conversation

Let's start with a number that tends to reframe the entire discussion.

According to JLL's Catherine Loy, generating an additional $10,000 per month in ancillary income translates to $120,000 in annual NOI. At a 6% cap rate, that single revenue line, if sustained, adds $2 million in asset value.

Anjee Solanki of Colliers put it plainly: "Every square inch is so valuable."

That's not a new insight. What's new is the scale of opportunity that proptech is creating and the speed at which some operators are moving while others are still treating ancillary income as a rounding error.

For context: depending on property type and initiative, ancillary income can now represent anywhere from low single digits to nearly 30% of total NOI. For properties carrying high operating costs or navigating flat-to-declining traditional tenant revenue, that range isn't theoretical, it's existential.

What's Driving the Shift?

Three forces are converging right now:

1. Infrastructure demand is accelerating. 5G networks, EV charging infrastructure, autonomous vehicle logistics, and drone delivery nests aren't future scenarios, they're active deal flow. Federal Realty is negotiating drone delivery leases in Arizona. Brookfield is running active Wing drone delivery pilots at two Texas properties. Autolane is establishing autonomous vehicle pickup zones at Santana Row in San Jose.

Each of these represents a new tenant category that didn't exist five years ago that pays for access to the physical footprint of a well-located property without displacing any existing revenue.

2. Brand expectations have evolved. The traditional sponsorship model , such as putting a logo on a directory, no longer satisfies what leading brands are looking for. As Catherine Loy noted, "Brands are no longer just looking for a place to be. Brands are looking for a place where they can truly engage with their customers."

That shift is meaningful. It means properties that can offer data-verified audience profiles, contextually relevant placements, and measurable engagement are in a fundamentally stronger negotiating position than those that can only offer square footage.

3. The NOI calculation has changed. Federal Realty's Katie Kurtz described the mindset shift well: ancillary income is no longer a small slice of a large pie. For sophisticated operators, it's becoming a dedicated growth strategy with its own pipeline, deal structures, and underwriting logic.

The Digital Storefront as Ancillary Asset

One category that sits at the intersection of all three trends, and is still underutilized by the majority of retail property owners, is digital display tapped into a local and national programmatic advertising network. 

Window-facing and storefront-integrated digital screens aren't a new concept. What has changed is the economics, the technology, and the buyer demand on the advertising side.

Today's premium digital out-of-home networks offer property owners and their tenants something meaningfully different from the static vinyl and backlit displays of the last decade:

• Programmatic demand: national and local advertisers buying inventory through DSPs in real time, meaning revenue isn't dependent on a single direct advertiser relationship
• Audience data: location-based audience profiles updated in near real time, which is exactly what brand buyers want when Loy says they're "digging into data and analytics to find the right locations"
• Dual-sided format: screens that simultaneously serve street-facing advertising inventory and in-store tenant promotion, which deliver two revenue streams from a single physical installation
• Zero-cost installation models: emerging network operators are absorbing hardware costs in exchange for ad revenue share, which removes the capital barrier that has historically kept smaller properties on the sidelines

That last point matters for operators who are drawn to the NOI upside but cautious about capital allocation. When Colliers' Solanki noted that "there's always that capital cost, or ongoing cost, and you have to balance the two out," she was describing a legitimate friction point that the best digital media partners have specifically designed around.

What Separates the Right Display Partner From the Wrong One

Not every digital display vendor is built the same, and the difference matters more than it might seem.

Properties that have deployed commodity hardware or signed with undercapitalized operators are discovering that screen downtime, ad content quality issues, and inconsistent revenue make the ancillary income case harder to sustain — and harder to explain to tenants.

What to look for:

• Hardware quality standards: Premium commercial displays, like Samsung, have a meaningfully different durability and visual impact profile than commodity alternatives, which are relevant for storefronts where the screen is also a brand statement for the property.
• Third-party audience verification: Impression counts and audience data should be independently audited, not self-reported.
• Network depth: A media partner with hundreds of verified locations and real programmatic demand will consistently outperform a small or unverified network in both revenue and fill rate.
• Tenant alignment: The best deployments serve the host business, not just the advertiser — giving tenants direct access to screen time for their own promotions alongside the paid ad inventory.

The Bigger Picture

What the ICSC coverage is really describing isn't a collection of interesting gadgets. It's a structural shift in how commercial real estate generates value, where the media value of physical space is being recognized, priced, and monetized at scale for the first time.

Drone nests, EV chargers, autonomous vehicle zones, digital display networks aren't competing strategies. They're variations on the same thesis: well-located physical space has audience value that extends beyond the traditional tenant relationship. Operators who build the infrastructure to capture that value now are positioning themselves for a compounding advantage.

The $2 million valuation math is a useful frame. But the more important question is what $10,000 per month in new, scalable ancillary revenue looks like across a five-property portfolio or a fifty-property one.

If you're interested in learning about the strategic media value of your commercial real estate portfolio, contact our team.