Key Points
- According to a JLL report, more stores closed or downsized than opened or expanded during the first quarter, but vacancy rates remain low at just 4.4%.
- Retail offers much better returns than other commercial real estate sectors.
- Investment transaction volumes reached more than $15 billion during the first quarter, an increase of 5% compared to the first quarter of 2025, according to the report.
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. The US retail market has started 2026 on relatively healthy footing, and investors, particularly institutional investors, are starting to pay more attention. Retail appears to be moving from a story of recovery to one of scarcity. More stores closed or downsized than opened or expanded during the first quarter, but vacancy rates remain low at just 4.4 percent, according to a report from JLL, a commercial real estate services and investment management firm. This is because there has been very little new construction in the area. Retail also offers much better returns than other commercial real estate sectors. And that’s why investors are coming back, with trading volumes reaching more than $15 billion in the first quarter, an increase of 5% from the first quarter of 2025, according to the report. This was the highest first-quarter trading volume since 2023. “The alpha wolves are back and they’re waking up hungry,” said Paul Kurzawa, president and new CEO of retail owner and operator Centennial. “The rebound in equity and debt market fundamentals is fueling the search for strong double-digit returns in short- and medium-term securities, with spreads of 150 to 200 basis points outperforming market indices. These types of returns are now achievable, but only in the right situations.” Kurzawa, who oversees a 25 million-square-foot portfolio across 18 states, said the real change is not just in the return of capital, but also in investors being much more selective about where they deploy it. “What we’ve also seen, especially this year, from a lot of the institutional investors and venture funds that I’ve met with is that there is a very big appetite for core+ assets,” Kurzawa said, referring to high-end but still low-risk assets and long-term purchases. Institutional investors accounted for nearly 24% of multi-tenant retail investments over the past 12 months, their highest investment share since 2017, according to JLL. And bigger seems to be better. Big-ticket deals over $100 million accounted for 26% of retail investments between Q1 2025 and Q1 2026, compared to just 13% in 2023. “Many institutional investors are still under-allocated to retail compared to other property types,” Kurzawa said. “As more capital is set aside, investors are seeking larger portfolios and higher quality acquisitions in order to deploy capital more efficiently and achieve allocation goals more quickly.” The challenge, he added, is that there simply aren’t enough high-quality asset exchanges. This imbalance between strong investor demand and limited supply is creating more competition in the $100 million-plus deal space. He noted that value-add properties, which investors should upgrade, “are a little trickier,” but he also sees more capital flow there. “Investors are asking tough questions about where they can realistically create value, including diversifying uses or repositioning assets. If the story requires too much hope instead of math, these deals simply don’t happen,” he said.