Despite a broader slowdown in commercial real estate deal flow, the retail market is showing resilience, with investors continuing to find opportunities.

A recent broker report highlights strong demand driven by the performance of fast-food chains and convenience stores.

Additionally, the redevelopment of spaces left vacant by large retailers is attracting capital to power and neighborhood centers. This, combined with the Federal Reserve’s ongoing interest rate cuts, is creating a favorable climate for retail investment.

The report also notes that consumer spending remains strong, with core retail sales reaching record highs in August, defying economic challenges. The Fed’s three interest rate cuts this year are expected to lower borrowing costs and stimulate consumer demand, leading to increased retail foot traffic and higher discretionary income. As a result, demand for retail space is rising.

The expansion of national brands like Freddy’s Frozen Custard and Steakburgers is also intensifying competition for net-leased properties, pushing prices for properties with solid fundamentals higher. Lower borrowing costs, expected to persist through the year, are likely to continue driving investment activity, even as the broader real estate market slows.

Source:  GlobeSt.