Investment in the retail sector reached $21.2 billion during the second half of 2024, an increase of 36% from the first half of the year. This boosted total retail investment volume by 6% year-over-year to $36.8 billion, according to JLL’s Q4 retail market dynamics report.
But the surge may not stop there, as the broker predicted that the sector could experience an even bigger year in 2025.
The significant increase in retail investment activity last year was fueled by interest rate cuts and positive sector headwinds, including historically low new supply growth and vacancy rates, according to the report. An influx of capital formation for retail, acquisition opportunities below replacement costs in most major markets and premium valuations for portfolios due to challenges in large-scale investments are likely to propel continued growth in retail investment volume. Prime opportunities include convenience and luxury spaces via grocery-anchored and unanchored centers as well as urban retail in prime and emerging corridors, said the report.
The average deal size in the retail sector reached a 12-year high last year at $20.2 million, an 8.3% increase from the previous year.
“This growth was primarily fueled by a surge in high-value transactions, particularly those exceeding $100 million, with the total volume in this category expanding 1.4 times compared to 2023,” said the report. Notable deals included prestigious urban retail spaces such as 717 Fifth Avenue and the LINQ Promenade lifestyle center. Several significant mall acquisitions, including RiverTown Crossings Mall, Westfield Annapolis, and White Marsh Mall, also were notable retail transactions last year. Larger-scale retail investments are expected to persist in 2025 as investors take advantage of a unique opportunity to acquire retail properties at prices below their replacement costs due to current market conditions, said JLL.
“Value-add opportunities for larger-box, trophy power centers or malls are expected to continue to be attractive to well-capitalized investors capitalizing on the ongoing recovery in consumer demand for these retail formats,” the report said.
Source: “Retail Investment Boom Expected to Continue in 2025”
