- Multi-tenant retail investment sales rose by 9.8% year-over-year to $13.1B in Q1 2025, signaling strong investor confidence in necessity-based and lifestyle centers.
- Single-tenant retail struggled comparatively, with sales volume still down year-over-year despite a slight quarterly improvement, as cap rates continued their steady rise.
- Private and institutional investors are increasingly favoring multi-tenant properties for stability, while international buyers made a notable comeback in the single-tenant space.
Cautious Optimism to Start 2025
The retail sector entered 2025 with a measured sense of optimism, reports Globe St. However, the performance of single-tenant versus multi-tenant properties varied sharply, largely shaped by tenant dynamics and consumer behaviors.
Multi-Tenant Retail Stays Resilient
Multi-tenant retail had a robust first quarter, with investment sales reaching $13.1B—a 9.8% year-over-year increase. Average cap rates slightly ticked up to 7.22%, reflecting modest pressure from rising borrowing costs but still maintaining investor appeal. Grocery-anchored and lifestyle centers stood out for their low vacancy rates and dependable cash flows.
Private buyers made up 52% of the market, while institutional investors held a 36% share, emphasizing broad confidence in this segment. Nevertheless, closures by major retailers such as Big Lots and Joann Fabrics introduced localized risks.
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Single-Tenant Faces Continued Pressures
Single-tenant retail saw sales improve modestly quarter-over-quarter to $3.05B but remained down compared to early 2024. Cap rates rose by 58 basis points year-over-year to 6.96%, part of a nine-quarter trend of steady increases from a low of 5.60% at the end of 2022.
Private investors dominated the buyer pool at 47%, while institutional interest remained tepid at 20%. A notable bright spot was the resurgence of international buyers, whose share jumped from 1% in 2024 to 15% in early 2025.
What’s Next
Retail’s overall trajectory will be shaped by consumer confidence, macroeconomic trends, and fiscal policy. Multi-tenant assets appear poised to remain a favored category, thanks to their diversified tenant mixes and resilient income profiles. Meanwhile, single-tenant retail faces a slower recovery, with lease structure and tenant quality as critical investment considerations.
