Market Overview
The US retail market started 2026 on a healthy footing, with institutional investors increasingly focusing on the sector. According to a JLL report, more stores closed or downsized than opened or expanded during the first quarter, but vacancies remained low at 4.4% due to limited new construction.
Investment Activity
First-quarter retail transaction volumes exceeded $15 billion, a 5% increase compared with Q1 2025 and the highest first-quarter volume since 2023.
Institutional investors accounted for nearly 24% of multitenant retail investment over the past 12 months, their highest share since 2017. Large deals ($100 million+) made up 26% of retail investment from Q1 2025 through Q1 2026, up from 13% in 2023.
Investor Sentiment
Paul Kurzawa, president and incoming CEO of Centennial, a retail owner and operator, said investors are seeking strong double-digit returns over short- to mid-term holds with spreads of 150 to 200 basis points.
He noted that capital is returning, but investors are being selective, with a strong appetite for core+ assets (higher-end, low-risk, long-term buys). He also said many institutional investors remain under-allocated to retail relative to other property types, and as more capital comes off the sidelines, investors are pursuing larger portfolio and trophy-quality acquisitions.
A shortage of high-quality assets trading is creating competition in the $100 million-plus deal space. Value-add properties are also attracting capital, but deals requiring too much hope rather than math are not getting done.