It’s time to invest in retail.

Cohen & Steers reports that as private real estate reaches its low point, opportunities in retail are emerging. With high demand and low supply, the increase in retail bankruptcies has led to higher rents for available spaces, making it an attractive market for investment.

Insights from Real Estate Investment Trusts (REITs) suggest a positive trend; REITs hit their low in October 2023 and have been rising since. Meanwhile, private companies have shown positive returns for four consecutive quarters.

Strip centers, once at the bottom, are now outperforming other property types. With retail construction stagnant—less than 5 million square feet being built nationally—occupancy and rent growth are expected to remain high. In the first half of the year, investors spent $28.5 billion on retail, a 23% increase year-over-year.

The key factor moving forward is consumer behavior. Despite fluctuations in retail sales due to inflation and other economic challenges, sales have shown signs of stability, with a 5% year-over-year growth last month.

As we approach the holiday shopping season, this period will reveal more about consumer sentiment and the future of the retail sector. Retail is back in focus, and investors are ready to engage.

Source: Cohen & Steers.

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