Retail REITs Ride A Scarcity Boom At ICSC 2026

Retail real estate entered ICSC 2026 with a noticeably different tone than prior years: optimism has replaced skepticism, and scarcity has replaced oversupply concerns. According to a May 21 BofA Securities report, conference attendance rose roughly 15% to 20% year over year as brokers, landlords, tenants, and investors crowded Las Vegas looking for deals and space.

Instead of debating whether brick-and-mortar retail can survive e-commerce pressure, industry players spent the conference discussing how hard it has become to secure quality retail space and investment opportunities. BofA analysts summarized the shift bluntly: “Retail’s new problem is not demand, it’s availability.”

A Sharp Reversal From Retail’s Post-Pandemic Reset

Retail landlords spent much of the past decade battling store closures, weak foot traffic, and investor concerns tied to online shopping. That backdrop has changed quickly over the last two years as limited new construction collided with improving retailer performance.

At ICSC 2026, Simon Property Group said it was having a record year for leasing meetings and brought more employees to the conference than at any point in the past decade, according to BofA Securities. A private shopping center operator told analysts leasing production is running 20% above its four-year average.

The broader message across panels and meetings was consistent: retailers still want physical stores, but there is increasingly less high-quality space available.

The Details

Retail executives said higher interest rates and macroeconomic uncertainty have not materially slowed leasing activity. Simon Property Group reported broad demand across its portfolio, while one retailer said it is redesigning stores to maximize selling space and reduce backroom footprints because premium locations are becoming harder to secure.

Investor demand is also accelerating. One private owner cited grocery-anchored shopping center cap rates compressing to roughly 5.75%, down from 6.5% a year ago, as institutional capital floods back into the sector. A transaction broker told BofA that more groups are pursuing shopping centers today than at any point in his 30-year career.

Meanwhile, sellers remain selective, creating a mismatch between available capital and available product. One REIT executive summarized the imbalance this way: “The wall of capital is greater than the rise in the 10-year.”

Malls Regain Investor Attention

One of the more notable developments at ICSC 2026 was renewed enthusiasm around malls. Institutional investors largely avoided the sector for years. That momentum builds on broader retail positioning changes discussed at last year’s Las Vegas conference. BofA analysts said “malls are back in vogue,” with capital increasingly targeting the sector while some investors rotate away from office.

Simon Property Group said occupancy has reached 96%, while traffic and tenant sales continue trending higher. The company also highlighted a $5B development and shadow pipeline expected to generate roughly $500M in future NOI.

Developers are increasingly focusing on mixed-use densification strategies as well. Private mall owners discussed adding residential units and unlocking excess land value, aided by municipalities that appear more willing to approve redevelopment projects than before the pandemic.

Why It Matters

The retail sector’s recovery is evolving into a supply-constrained growth story. Limited new development, improving tenant demand, and abundant investment capital are giving landlords more pricing power and boosting rent growth expectations.

BofA analysts noted that rents may need to rise another 35% before large-scale new retail development becomes financially feasible. Until then, landlords appear positioned to benefit from tighter vacancy, stronger lease economics, and embedded mark-to-market upside.

For public retail REITs, companies with scarce locations, redevelopment opportunities, and balance sheet flexibility could continue outperforming peers as investors chase stable cash flow sectors.

What’s Next

The biggest variable for retail REITs remains interest rates. While demand fundamentals remain strong, investors and operators are closely watching Treasury yields and underwriting assumptions as cap rates compress further.

Still, the tone at ICSC suggests the sector has entered a new phase. Retail’s story is no longer about survival—it is increasingly about access: access to space, access to deals, and access to a shrinking pool of high-performing retail assets.