Retail sector provides strong value-add investment opportunity

Dec 22, 2021, 11:55 AM by Daniel Diebel
Investors should strongly consider retail as an investment strategy over the upcoming years. In recent years, retail’s share of overall investment transaction activity in the U.S. dropped to an historical low of 9% in 2021.

Retail has the highest cap rate (6.4%) among the four major sectors (office, industrial, apartment and retail). However, the retail sector has been recovering as evidenced by discounts to net asset value (NAV) for the decline in public REITs for shopping centers (-2.3%) and regional malls (-8.3%) by more than 40% in May 2020.

Investor confidence is up reflected in stabilizing retail REIT pricing. Relatively strong future rent growth, combined with stable cap rates, will drive solid returns and value growth, particularly for well-located assets in high-growth Sunbelt markets.

In EA's most recent report, we look at other factors outlining why investing in retail may be a smart investment strategy. 


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