Quick Takeaways

  • The retail real estate market is returning to pre-pandemic levels.
  • Flexible leasing is in high demand.
  • Investors and lenders have renewed interest in retail real estate.

“Demand for retail spaces continues to slow down. Compared to the early months of 2023, net absorption has seen a significant reduction, falling by approximately 30 percentage points. But, despite lower absorption rates, the limited availability of retail spaces maintains vacancy rates low, hovering around 4%, the lowest rate among any other sector in the commercial real estate market. With fewer new construction deliveries expected, the fundamentals of this sector will remain solid in 2024. When new supply is constrained, it can lead to tighter market conditions, potentially supporting rental rates and occupancy levels, which are key components of the commercial real estate sector.” Commercial Real Estate Market Insights (National Association of REALTORS®, Mar. 2024)

Innovative leasing strategies are key. Tenants want greater flexibility as a hedge against future uncertainty. Commercial real estate professionals who understand and can creatively build upon leasing fundamentals will do well in this environment.

Investor interest in retail real estate has returned to pre-pandemic levels. Lenders are again ready to finance retail properties. Learn more about the benefits and risks of different retail investing methods.

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