The Commercial Real Estate Alpha Site

Being an income producing asset class with lots of similarities to multifamily, I keep my finger on the pulse of these niches and industries in my 5 county area so if you need services, I am ready to get to work.

This is only the executive summary of the detailed report. For the entire report, CLICK HERE <—

Retail Sector Well-Anchored Against Potential Turbulence

Leaders in this year’s Index have especially low vacancy relative
to their peers. The top 15-ranked metros also share a mutually
reinforcing combination of strong growth projections for employment, households and consumer spending. These expectations are supporting strong levels of projected revenue growth
for retail property owners in these markets.

Metros with favorable demographics but recent property
performance hurdles land among the Index’s middle ranks this
year, with gateway markets recovering from recent challenges
slotting outside the top 30. The lower echelon of the NRI comprises metros with more stagnant population sizes.

NATIONAL ECONOMY

The economy was expected to expand more moderately in
2025, but new policies from the White House have clouded the
outlook for economic growth and monetary policy. Earlier this
year, President Trump moved to implement heightened import
duties on goods from China, Canada, Mexico and other nations.
The evolving trade dispute could reignite inflation, alter the
Federal Reserve’s decisionmaking and reduce GDP growth.

Stubborn or rising rates of inflation would restrict many households’ spending power at a time when consumer debt is at an
all-time high. The Trump administration, however, intends to
extend many of the Tax Cuts and Jobs Act provisions, including
lowered personal income tax rates, which could be stabilizing.

NATIONAL RETAIL OVERVIEW

Recent consumer resiliency and improving foot trac across
many retail types have fostered demand across a diverse tenant
base for available space. Some near-term headwinds are likely
to impact the sector in 2025, though, including potentially rising inflation and a shift in some consumers’ behavior.

A spike in store closures will also be evident this year; however, demand for these spaces exists among other companies
seeking to rapidly gain market share. This backfilling, along
with a shrinking construction pipeline and a number of already
planned store openings, will support overall occupancy.

• The overall interest rate outlook for this year remains volatile.
  The Federal Reserve could raise the overnight lending rate if
  inflation becomes persistently heated or potentially cut rates
  should the economy worsen drastically. Longer-term interest
  rates, which have been on a recent downward trend, could push
  back up if elevated Treasury issuance occurs at a time when key
  buyers of U.S. debt are pulling back.
• Many lenders have increased their targets for 2025, indicating
  capital should be readily available for prospective borrowers
  pursuing retail properties. CMBS will represent the primary
  avenue for interest-only loans, while borrowers seeking non-recourse loans for grocery-anchored centers and unanchored
  strip centers may turn to life insurance companies.
• INVESTMENT OUTLOOK
• Net-leased assets and well-located shopping centers, especially those with high-credit anchor chains and long-term leases,
  should attract active investors and others with significant
  capital ready for deployment in 2025. Tight conditions across
  most retail center types should also elicit investment, supporting trading velocity. A cohort of investors focused on capturing
  value through re-tenanting may target smaller strip centers and
  some power centers.
• 
  SINGLE-TENANT OUTLOOK
• Despite a rise in store closures, a moderate shift in demand for
  single-tenant space was registered last year, placing sector vacancy 100 basis points below its long-term average. While this
  would appear to warrant construction, deliveries are historically muted in 2025. The combination of minimal supply-side
  pressure and sustained consumer resiliency should continue to
  reinforce positive leasing velocity.
• Single-tenant trading in 2024 was on par with the 2019 recording — a contrast to most major commercial real estate sectors.
  Attracted to the property type’s demand metrics, private buyers
  seeking properties that provide long-term stable income will
  remain active in the segment, often utilizing 1031 exchange
  capital to trade into less management-intensive properties.