Retail Market Snapshot

Mid-Year 2025

Market Overview

The retail sector remained steady in Q2 2025, with no major surprises but continued divergence between asset types. Grocery-anchored centers and long-term net lease properties remain highly sought after, while regional malls face ongoing challenges, including the potential impact of tariffs on consumer spending. Transaction volume increased modestly, though valuations held steady amid persistent store closures. Despite these headwinds, tenant demand in select segments, such as experiential retail, continues to show resilience, with some retailers actively expanding into mall environments.

Key Trends

Grocery & Net Lease Strength: Investor demand remains high for grocery-anchored centers and single-tenant assets with long-lease terms.

Mall Struggles Continue: Regional malls face pressure from store closures and tariff concerns affecting sales performance.

Selective Expansion: Retailers like Dick’s House of Sports are leaning into mall locations for their foot traffic advantages.

Notable Transactions

• Starwood Property Trust acquired a net lease (NNN) retail portfolio from Brookfield Asset Management’s Fundamental Income Properties in July for $2.2 billion, totaling 12 million SF across 467 properties in 44 states. The portfolio spans 56 industries and includes 92 tenants, with a 17-year weighted average lease term and contractual rent growth.
• Federal Realty Investment Trust acquired Town Center Plaza and Town Center Crossing from an undisclosed seller in July for $289 million,
  totaling 550,000 SF in Leawood, KS. The open-air centers are anchored by Trader Joe’s, Apple, lululemon, and other top national retailers.
• Kimco Realty acquired a grocery-anchored shopping center from
  Regency Centers in May 2025 for $72.5M ($312 PSF), totaling 232,000 SF in Orlando, FL.
• InvenTrust Properties acquired a retail center from SITE Centers in April 2025 for $58.3M ($295 PSF), totaling 197,500 SF in Scottsdale, AZ.
  

Chapter 11 Activity

• Forever 21 Clothing
• Hooters Restaurant
• Joann Fabric & Craft
• Rite Aid Pharmacy

Transaction Volume – Up from Q1, though cap rates and valuations remain steady.

Vacancy Pressure – Store closures continue to impact occupancy and valuation.

Outlook – Stabilization expected as closures level off and vacant spaces are reabsorbed in H2 2025.