Retail Market Update: Holding Steady Despite Store Closures

Low Vacancy, High Rent Spreads Continue to Support Retail Real Estate Investment

By Joseph Miller, MAI, MRICS, Managing Director for Partner Valuation Advisors, published on May 05, 2025, on GlobeSt.com

As we continue to move through 2025, which is likely to bring continued economic uncertainty, many investors will be watching to see how retail closure and backfills impact their overall portfolio. While there are retailers in the market looking for space, many are being more cautious than their predecessors when signing large, long-term leases. Many investors also believe that retail in the U.S. is under demolition and as we continue to see mall redevelopments take way and the available retail vacancies should continue to trend downwards, creating opportunities for retail owners.

In this latest GlobeSt article, Joseph Miller discusses how low vacancy will offset store closures, how grocery-anchored stores are still favored, and shares some trends to watch for the rest of 2025.

Putting the Active in Active Adult

By Brian Chandler, MAI, CRE, FRICS, Senior Managing Director for Partner Valuation Advisors, is cited in the February/March 2025 edition of Seniors Housing Business magazine.

As the senior housing industry's Active Adult subsector matures and gains popularity, communities cater to a younger demographic with amenities like fitness centers and travel programs.

"It's still in its infancy right now," Brian Chandler, Senior Managing Director for Partner Valuation Advisors, says of the subsector, "but it's starting to pick up from what we're seeing."

Chandler cites a number of amenities he's seen, including full-scale fitness centers, swimming pools, bistros, pickleball and bocce ball courts, and enhanced common areas among the attractions.

Read the full article to learn more about this popular subsector.

Optimism for the Hotel Investment Market

Despite Headwinds, Topline RevPAR Is Expected to Grow Through the Remainder of 2025 into 2026

By McKenna Luke, MAI, Managing Director, at Partner Valuation Advisors | Published here and GlobeSt.com, on March 13, 2025.

The hospitality sector is enjoying renewed interest from investors, with more deals in the pipeline, increased refinancings, and improved transaction volume. While the industry still faces challenges, optimism prevails for modest growth over the next year.

Anticipated Headwinds and Tailwinds to Hospitality Performance

The general consensus is that topline RevPAR will grow modestly through 2025 and into 2026, albeit likely below inflationary levels. On the positive side, demand for both business and leisure travel remains robust or continues to rebound depending on the segment. Leisure travel remains a cornerstone of the new demand mix, although somewhat bumpy in the last four years given the pent-up demand for leisure travel, deficit of international travelers to the US, and reduced spending within the economy and midscale chains due to inflationary pressures and economic uncertainty. A continued return-to-office movement and lower debt costs bode well for commercial travel to increase in both frequency and length of stay. Convention center bookings are strong for 2025/2026 and large-scale events such as the World Cup should drive demand.

However, expenses are expected to outpace RevPAR gains, as climate events continue to push insurance rates higher and changes to immigration and trade policy impact the cost of staffing and goods. Although revenues have met or exceeded 2019 levels, total profitability, especially when considering inflation adjustments, remains below the pre-pandemic figures for a number of assets.

While hotel operators and owners are embracing AI and other tech to increase efficiency, they remain focused on human connection with guests as a cornerstone of the industry. AI and innovation can reduce costs by improving scheduling and staffing efficiency; boost overall revenue through rate adjustments or F&B revenues; and free up hoteliers to interact more often with guests. A myriad of other solutions on the horizon will help increase profit and increase connection with guests. Operators who sit on the sidelines and ignore AI will not only decrease the guest experience but leave money on the table.

While the cost of debt remains elevated, tightening spreads and increased availability of debt have and will support transactions and refinancing. Many investors have begun to move off the sidelines and are no longer waiting to get deals done.

Historically, hospitality has not been the darling of real estate investment due to higher perceived risk and volatility. However, hospitality assets offer the ability to combat inflation with daily rate changes. This, along with hospitality’s current performance relative to other asset classes—especially office—has revigorated interest in the hospitality sector over the last two years. As an asset class, hospitality offers both yield and growth, especially given the industry’s desire to continue to innovate, drive revenue in creative ways, and embrace innovation for cost savings. Smart investors have realized there are portions of hospitality that are less risky, such as extended-stay, which has driven somewhat of a hybrid investor pool.

Hot Hospitality Segments 2025

As we look into 2025 and beyond, some specific sectors that are expected to perform well include extended-stay properties, outdoor experiential lodging, boutique and luxury hotels, and branded-residential.

Luxury demand remains strong and investor/lending interest in trophy assets or Single Asset Single Borrower (SASB) deals were a bright spot in 2024. Furthermore, the pricing ability within the luxury segment has combated rising costs, supporting an overall strong return.

The outdoor and experiential hospitality segment continues to grow since its relatively recent inception, with increasing institutional investment over the past 5-7 years. Prior to the pandemic, outdoor and experiential hospitality was limited to one-off “glamping” destination ranging from a tent without AC or heat to ultra-luxury, multi-bedroom units. The lack of definition and available data within the segment has resulted in a slow burn of investor interest and increased demand over recent years. Success in outdoor and experiential hospitality requires an understanding of past successes and failures within the segment, the ability to scale and retain a unique customer experience, and access to relevant data. Be sure to work with an experienced advisor in this unique space as data can be limited, seasonality and infrastructure requirements differ from typical hospitality, and barriers-to-entry can widely vary.

Extended-stay remains a targeted investment within the industry, especially given the higher profit margins and investor overlap with segments such as multifamily. Economy extended-stay has led the segment in terms of new developments and large portfolio transactions in recent years. Midscale extended-stay, a segment established within the last few years, is the newest path of growth and fits the niche between traditional extended-stay and economy extended-stay. While construction financing overall remains somewhat constrained, the lower construction costs and overall investment in both economy and midscale extended-stay should support continued pipeline growth. The only question is, will luxury, serviced, extended-stay be next? Or will this demand remain within the growing branded residence segment?

Hotel Construction Pipeline

Projections for new supply growth in 2025 should support stable or growing overall occupancy, while new supply may increase into 2026 or 2027. In the decade prior to COVID, 2010 to 2019, average supply growth was between 1 to 2%. Since the pandemic and even as recently as 2023 and 2024, supply growth was still down by half. New supply is expected to increase in 2025; however, projects under construction remains compressed outside of a few key markets such as Phoenix. Knowing the actual construction pipeline, which projects are financed, and which projects are almost shovel-ready will be an important distinction for investors in the near term. While construction costs and cost of debt can present hurdles, strong projects have been able to obtain financing in recent months.

Conclusions

With careful strategy, investors can capitalize on more transactions, new construction, and modest growth over the coming year. Seek out advisors with focused hospitality expertise who can support informed investment decisions with tools like feasibility and market studies. Consider engaging consultants with hotel experience to provide due diligence assessments and risk management services. Augmenting your strategy with a team of highly qualified experts will ensure you have the data you need to take advantage of the opportunities presented by this growing market.

The Good, the Bad, and the Unknowns: CRE Finance Trends and Tips for ‘25

Strategies for Navigating the Ups and Downs of Today’s Commercial Real Estate Landscape

By Joe Derhake, PE, CEO of Partner Engineering and Science Inc., and Eric Enloe, MAI, CRE, FRICS, Senior Managing Director of Partner Valuation Advisors | Published Feb. 26, 2025, on GlobeSt.com.

The recent MBA CREF conference was illuminating both on a macro forecast level, as well as in several important themes that emerged. MBA is projecting a positive year overall, but not as positive as previously forecasted - MBA revised its 2025 C/MF mortgage lending forecast down to 16% from its August 2024 projection of 24%. MBA’s chief economist and other panelists pointed to a mix of tailwinds and headwinds, including:

A strong appetite to lend across all debt types
Significant unpredictability – in the 10-year treasury, macroeconomic environment, and the US economic and policy environment
Continued elevated interest rates, and borrowers continuing to wait for drops
The “wall of maturities”, while an overplayed term, will be a reality in 2025 with nearly $1 trillion in CRE mortgages set to mature
Lenders will likely take a “no more free extensions” stance, adding to the maturities and forcing some action in the form of sales, refi’s, loan workouts, or foreclosures

In this Globe St. article, Joe Derhake and Eric Enloe break down key property trends for 2025 and beyond and offer guidance on how to make the most of this unique market.

Senior Housing Sector Getting Hit With Depressed Demand, Billions In Loan Maturities

Published in Bisnow National on Sept. 4, 2023

Betting on a forecast "silver tsunami" of baby boomers seeking varying levels of at-home healthcare after retiring, developers in the five years leading up to the pandemic poured billions into new assisted living centers and skilled-care facilities.

But now, with that population hesitating to take the step into senior housing, many of these bets are in question as the sector deals with a labor shortage, depressed demand, and $2B in encroaching loan maturities.

Read more in this article, featuring Partner's own, Brian Chandler.

Holistic Approach to Affordable Housing Due Diligence and Impact on Valuation

By JR Lephew, Director of Affordable Housing at Partner Engineering and Science, Inc,
and Owen “Chip” Ard, MAI, at Partner Valuation Advisors

The due diligence process is critical for ensuring the success and sustainability of affordable housing projects. The margins for affordable housing developers and owners are razor thin, and it is critical that they have a full understanding of the project's needs to ensure profitability and achieve the highest possible valuation.

Read more in this article from GlobeSt.com.

Seven Seniors Housing Specialists Across the Country Join Partner Valuation Advisors

Focusing on the Top Performing Seniors Housing Sector

Chicago, June 29, 2023 – Partner Valuation Advisors, a national commercial real estate valuation advisory firm, continues its rapid growth across the country, furthering its position as the fastest-growing commercial real estate valuation advisory firm in the U.S. Partner Valuation Advisors has expanded its seniors housing team with the hiring of seven professionals. The new additions are spread across four states and include Shawn-James O’Connor, Executive Vice President, Patrick McCrae, Director, Andrea Roberts, Director, Bradley Grossa, Director, Allison Stavinoha, Director, Karlie Guta, Senior Vice President, and Jacob Sandler, Associate.

Partner Valuation Advisors’ Senior Managing Director Eric Enloe, MAI, CRE, FRICS, said, “Our footprint has rapidly expanded nationally over the past 10 months, and we continue to build our specialty practice teams to better serve clients through unrivaled expertise assembled to manage complex asset valuations. Under the leadership of national seniors housing practice leader, Brian Chandler, the addition of these seven team members positions Partner Valuation Advisors as the premier seniors housing valuation team in the country, which is why the largest investors and lenders in this sector rely on us as a trusted advisor helping guide strategic decisions.”

The seniors housing sector has proven to be a top performer during recessionary periods due to the needs-based nature of the asset class. There are significant amounts of capital currently on the sidelines that are ready to be deployed into the industry once economic pressures subside as a result of the senior housing sector’s long-term demand trends and recession-resistant nature.

The latest additions to Partner Valuation Advisors

Shawn-James O'Connor, Executive Vice President, Denver, Colorado, brings over 23 years of expertise in seniors housing and health care. Throughout his career, he has focused on valuation and consulting engagements encompassing a diverse range of seniors housing and long-term care properties. His extensive experience includes conducting numerous comprehensive appraisals nationally, with a particular emphasis on multi-level care retirement campuses and continuing care retirement communities (CCRCs). Furthermore, Mr. O'Connor has demonstrated his proficiency as an expert witness. His expertise has been sought in various legal proceedings, including those before the State Board of Assessment Appeals Court in Colorado, the State Board of Equalization in Arizona, and the Board of Equalization in Missouri. He previously served at JLL Valuation & Advisory as well as Cushman & Wakefield and has performed valuation assignments on more than 2,000 seniors housing and healthcare assets in 49 states, the District of Columbia, and Canada.
Patrick McCrae, Director, Florida and Pennsylvania, brings 18 years of commercial real estate experience appraising retail, office, industrial, multifamily, hotels, and special-use assets throughout the United States. He joins after serving six years as a Senior Director at JLL Valuation & Advisory. For the past 15 years, Mr. McCrae has specialized in the appraisal of seniors housing properties. Mr. McCrae has distinct experience in ad valorem tax appeal, assisting national clients by preparing appraisals for and testifying in tax appeal hearings. For several years, Mr. McCrae was appointed as a Special Magistrate by the Hillsborough County (Florida) Value Adjustment Board, where he presided over tax appeal hearings for a variety of residential and commercial property types.
Andrea Roberts, MAI, Director, Dallas, Texas, conducts appraisals for seniors housing and health care properties nationwide. Ms. Roberts joins with 11 years of appraisal-related experience, including eight years of specialized experience appraising senior housing and health care-related properties, having most recently served at JLL Valuation & Advisory.
Bradley Grossa, Director, Grand Rapids, Michigan, conducts appraisals for seniors housing and health care properties nationwide. He joins with seven years of appraisal experience, most recently at JLL Valuation & Advisory.
Allison Stavinoha, Director, Plano, Texas, conducts appraisals for seniors housing and healthcare properties across the U.S. Ms. Stavinoha joins with five years of experience, having most recently served at JLL Valuation & Advisory.
Karlie Guta, Senior Vice President, Dallas, Texas, conducts national appraisals for seniors housing and healthcare properties, however, her concentration of work has been across the Sunbelt and Pacific Northwest regions of the U.S. Ms. Guta joins with four years of experience, having most recently served at JLL Valuation & Advisory.
Jacob Sandler, Associate, Plano, Texas, brings commercial real estate appraisal experience involving seniors housing assets nationally. He joins from JLL Valuation & Advisory and has experience in appraisal work, team management, tech development, and championing a culture of diversity, equity, and inclusion.
Brian Chandler, MAI, CRE, FRICS, Senior Managing Director, adds, “Strong demand drivers provide a bright outlook for the seniors housing sector as the effects of an aging population will continue to impact growth in the sector. However, the next 24 months for the sector will be challenging at best. A combination of factors encompassing the lingering effects of the pandemic, labor market challenges, continued increased interest rates, rising cost of debt, increased construction costs, and higher capitalization rates is expected to continue in 2023 and will most likely produce more distressed acquisitions in the marketplace.”

Those considerations will drive a need for valuation experts who bring a deep understanding of the seniors housing sector, both from an investment standpoint as well as an operational perspective. Investors will seek advice on how to navigate the rising cost of capital that is materially impacting lending rates. Most senior housing market participants believe the actions taken by the Federal Reserve to fight rising inflation have impacted market pricing and expected investor returns. Active buyers are still in the market, but there continues to be a wider spread between the asking price and bidding price today. Deals are taking longer to transact as buyers are requesting longer due diligence periods.

Since launching in September 2022, Partner Valuation Advisors has issued over 1,236 valuations with an aggregate commercial real estate value exceeding $42 billion across 49 states. The Chicago-based, technology-forward firm has grown to more than 80 employees in 26 markets nationally, making it the fastest-growing commercial real estate valuation advisory company in the U.S. In recent months, 11 other CRE leaders have joined Partner Valuation Advisors.

Partner Valuation Advisors serves investors, lenders, investment funds, and real estate occupiers. Partner Valuation Advisors’ team members hold appraisal licenses in all 50 states and the firm has offices in Atlanta, Austin, Baltimore, Chicago, Cincinnati, Dallas, Denver, Des Moines, Indianapolis, Jacksonville, Los Angeles, Kansas City, Knoxville TN, Miami, New York City, Northern NJ, Phoenix, Raleigh, NC, Seattle, St. Louis, Tulsa, OK and Washington, D.C.

About Partner Valuation Advisors

Partner Valuation Advisors is a Chicago-based affiliate company of Partner Engineering and Science, Inc. The valuation enterprise was introduced in 2022 with the formation of a new team of leaders focused on performing commercial real estate valuations nationally for investors, lenders, and real estate occupiers. The team is led by Brandon Nunnink, CFA, and Eric Enloe, MAI, CRE, FRICS. Please visit us online at www.PartnerVal.com.

About Partner Engineering and Science, Inc.

Partner is the most trusted choice for third-party due diligence and consulting in the commercial real estate industry, providing full-service engineering, environmental, and energy services throughout the Americas, Europe, and around the globe. With a multidisciplinary approach, Partner serves clients at all stages from initial due diligence and design to development and construction, as well as the ongoing maintenance and optimization of a real estate asset.

Media Contact:

Partner Engineering and Science
Erika Haberlen
Marketing Director, Principal
310-615-4500
[email protected]

Ross Friedman Joins Partner to Expand New York and Tri-State Markets

Ross Friedman, MAI, AI-GRS, will serve as Managing Director

New York, NY - June 27, 2023 – Partner Valuation Advisors, a national commercial real estate valuation advisory firm, added Ross Friedman, Managing Director, to its rapidly growing leadership team. Friedman will lead the New York Tri-State practice for Core 3 asset types: industrial, office, and retail.

Since launching in September 2022, Partner Valuation Advisors has issued over 1,120 valuations with an aggregate commercial real estate value exceeding $33 billion across 45 states. The Chicago-based, technology-forward firm has grown to more than 80 employees in 26 markets nationally, making it the fastest-growing commercial real estate valuation advisory company in the U.S. Partner Valuation Advisors serves investors, lenders, investment funds, and real estate occupiers.

Partner Valuation Advisors’ Senior Managing Director Eric Enloe, MAI, CRE, FRICS, said, “Ross will be a tremendous asset to Partner Valuation’s continued national growth, and will be counted on to grow our presence in the New York and Tri-State markets. Ross has established himself as one of the top valuation professionals in the market. He has valued many of the most complex office, retail, and industrial assets and is trusted by some of the largest institutional investors in the U.S.”

In his prior roles, Friedman’s valuation and consulting assignments have included investment-grade properties in local, national, and international markets for commercial lending, financial reporting, portfolio valuation, tax purposes, litigation, and due diligence. Throughout his career, he has significant experience working on large-scale projects including Class A office towers on Madison and Park Avenue in New York, million-square-foot industrial properties in the Tri-State region, and hundreds of lease valuations for dental offices, fast food restaurants, and retail stores across the Northeast.

Prior to joining Partner Valuation Advisors, Friedman served as Executive Vice President and Tri-State Leader at JLL Valuation Advisory from 2021-2023, where he was responsible for establishing and developing the Tri-State region in Core 4 assets (Office, Industrial, Retail & Multifamily). Friedman also served as Director of BBG, Inc., where he led the National Operations for the Financial Reporting practice from 2016 to 2021. Earlier in his career, he worked in the New York region for RSM US LLP, an accounting firm, and Citigroup, a financial institution.

In recent months, 10 other CRE leaders have joined Partner Valuation Advisors including P. Ryan McDonald, MAI, FRICS, Managing Director in St. Louis; Owen “Chip” Ard, MAI, and Andrea Gillman, Managing Directors in Tulsa; Erik Hill, MAI, CCIM, MRICS, in Dallas; Brian Chandler, MAI, CRE, FRICS, in Raleigh, NC; Lana Lenovitz, MAI, MRICS, in Washington DC; Kenneth Jaggers, MAI, FRICS, in Kansas City, MO; Creighton R. Cross, MAI, AI-GRS, in Knoxville, TN; Justin Alexander, MAI, in Seattle, WA; and Talani Casariego, MAI, in Atlanta, GA. Additional senior-level hires are anticipated to join the firm over the next month.

Partner Valuation Advisors’ team members hold appraisal licenses in all 50 states and the firm has offices in Atlanta, Austin, Baltimore, Chicago, Cincinnati, Dallas, Denver, Des Moines, Indianapolis, Jacksonville, Los Angeles, Kansas City, Knoxville TN, Miami, New York City, Northern NJ, Phoenix, Raleigh, NC, Seattle, St. Louis, Tulsa, OK and Washington, D.C.

About Partner Valuation Advisors

About Partner Engineering and Science, Inc.

Media Contact:

Partner Engineering and Science
Erika Haberlen
Marketing Director, Principal
310-615-4500
[email protected]

Partner Valuation Advisors Adds Market Leader in St. Louis and National Self-Storage Practice Leader

P. Ryan McDonald, MAI, FRICS, will serve as Managing Director

St. Louis, MO - June 9, 2023 – Partner Valuation Advisors, a national commercial real estate valuation advisory firm, continues to expand its rapidly growing team with the addition of P. Ryan McDonald, MAI, FRICS, as Managing Director. McDonald will serve as Market Leader in St. Louis and National Practice Lead for self-storage properties.

Partner Valuation Advisors’ Senior Managing Director Eric Enloe, MAI, CRE, FRICS, said, “Ryan is the top valuation professional in the St. Louis market, and his reach extends across the Midwest and nationally. We are really pleased to add a talent like Ryan to our growing team. Additionally, Ryan’s expertise in the self-storage space will enable us to grow in a product type that has become one of the favored asset classes by investors. Ryan has been fortunate to work with the largest lenders in the space, as well as the largest institutional investors.”

Self-storage has emerged as a compelling asset class for investors because it has historically performed well, even during economic uncertainty, and it allows investors to diversify their portfolios. Demand for this niche property type remains high as people continue to downsize, relocate for jobs, or simply want to declutter their current home. The pandemic only accelerated investor interest in these typically lower-cost assets.

With 20 years of experience in the commercial valuation industry, McDonald has a broad range of experience in the valuation and analysis of various types of commercial real estate including self-storage, office, retail, industrial, multi-housing, seniors housing, hospitality, mixed-use, residential subdivisions, renewable energy properties, and going concern valuations of complex assets. McDonald has also provided expert testimony in both litigation and state tax appeal cases.

McDonald has managed a range of national client accounts and is regularly involved in national portfolio originations and management. He has deep real estate valuation ties with major financial institutions, pension funds, REITs, insurance companies, and hedge funds. He and his team have completed valuation and consulting assignments on more than 2,500 assets in all 50 states during the past five years.

Prior to joining Partner Valuation Advisors, McDonald served as Managing Director for JLL’s Valuation Advisory platform in St. Louis for more than six years from 2016-2023, leading a team of appraisers throughout the Midwest as well as JLL’s national self-storage practice. McDonald was also one of the founders of JLL’s Valuation Advisory platform when it launched in 2016. McDonald has been providing commercial real estate valuations since 2003, and prior to joining JLL, he was the Senior Managing Director of the St. Louis office of Integra Realty Resources (IRR).

In recent months, 10 other CRE leaders have joined Partner Valuation Advisors including Ross Friedman, Managing Director in New York; Owen “Chip” Ard, MAI, and Andrea Gillman, Managing Directors in Tulsa; Erik Hill, MAI, CCIM, MRICS, in Dallas; Brian Chandler, MAI, CRE, FRICS, in Raleigh, NC; Lana Lenovitz, MAI, MRICS, in Washington DC; Kenneth Jaggers, MAI, FRICS, in Kansas City, MO; Creighton R. Cross, MAI, AI-GRS, in Knoxville, TN; Justin Alexander, MAI, in Seattle, WA; and Talani Casariego, MAI, in Atlanta, GA. More senior-level hires are anticipated to join the firm over the next month.

Partner Valuation Advisors’ team members hold appraisal licenses in all 50 states, and the firm has offices in Atlanta, Austin, Baltimore, Chicago, Cleveland, Cincinnati, Dallas, Denver, Des Moines, Indianapolis, Jacksonville, Los Angeles, Kansas City, Knoxville, TN, Miami, New York City,

About Partner Valuation Advisors

About Partner Engineering and Science, Inc.

Media Contact:

Partner Engineering and Science
Erika Haberlen
Marketing Director, Principal
310-615-4500
[email protected]

How Retail Owners Are Staying Profitable in Today's Market

By Joseph Miller, MAI, MRICS, Managing Director

Value changes in retail assets are not as dramatic as in other sectors, but landlords must fine-tune tenant mix and address big-box vacancies to stay viable.

While the retail market is undoubtedly difficult right now, the positive news is that retail is no longer the least desirable asset class. The commercial real estate slowdown has affected all asset classes, but the retail market, which faced its own difficulties prior to rising interest rates and return-to-work challenges, is somewhat less impacted. Unlike industrial and multifamily properties, retail did not see significant pricing spikes over the last few years. While cap rates are increasing on retail properties, the changes in value are not as dramatic as with other sectors.

Read more in this article from GlobeSt.com.