U.S. retail investment volumes rise as institutional buyers return

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Ashutosh Sureka

3 hours ago

U.S. retail investment volumes rise as institutional buyers return — Retail investment volumes surge

Tighter supply and limited new construction are keeping U.S. retail vacancies low even as more stores close or shrink than open or expand in early 2026. That backdrop is drawing investors back to the sector, where transaction volumes exceed $15 billion in the first quarter and pricing power is strengthening for higher-quality assets.

Highlights

U.S. retail transaction volume in Q1 2026 exceeded $15 billion, rising 5% year-over-year despite more store closures and downsizings than openings.
Institutional investors accounted for nearly 24% of multitenant retail investment in the past 12 months, their highest share since 2017 according to JLL.
Deals exceeding $100 million comprised 26% of retail investment from Q1 2025 to Q1 2026, up from 13% in 2023, reflecting intensified competition for larger assets.

Retail scarcity and deal activity

As reported by CNBC and JLL, the U.S. retail market enters 2026 on relatively healthy footing, with vacancy at 4.4% despite more store closures and downsizings than openings and expansions in the first quarter. The report says muted construction is limiting new supply, helping landlords maintain tight conditions while retail yields remain more attractive than in other commercial real estate segments.

First-quarter retail transaction volume reaches more than $15 billion, up 5% from Q1 2025 and the highest first-quarter level since 2023. The market is shifting from a recovery story to one defined more by scarcity, with investors increasingly focused on assets that can deliver stronger returns in a supply-constrained environment.

Institutional demand targets larger assets

Paul Kurzawa, president and incoming CEO of Centennial, says capital is not only returning to retail but becoming more selective, particularly among institutional investors and venture funds seeking core+ assets. He says investors are looking for higher-end but lower-risk properties and are concentrating on situations where returns are supported by clear operating math rather than optimistic assumptions.

According to JLL, institutional investors account for nearly 24% of multitenant retail investment over the past 12 months, their highest reported share since 2017. Deals worth more than $100 million make up 26% of retail investment from the first quarter of 2025 through the first quarter of 2026, compared with 13% in 2023, indicating that larger portfolio and trophy-asset acquisitions are becoming a preferred way to deploy capital.

Kurzawa says many institutional investors remain under-allocated to retail relative to other property types, but a shortage of top-quality assets is intensifying competition in the $100 million-plus segment. He adds that value-add properties are more difficult to underwrite, though capital is also starting to move there when investors can identify credible ways to diversify uses or reposition assets.

In our earlier article on prime City of London office rents, we noted that limited new supply and resilient demand have pushed top-tier rents closer to West End levels. We highlighted record-setting leases at buildings such as One Leadenhall and 8 Bishopsgate as evidence that occupiers are paying up for scarce premium space, even as incentives remain common across both markets.

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