- Major retail REITs, including Simon Property Group, Kimco Realty, and Federal Realty, reported record leasing activity in Q4.
- Federal Realty signed 100 deals totaling 649K SF in Q4, achieving a 94.1% occupancy rate and forecasting further growth in 2025.
- Retail vacancy remained at a near-record low of 5.4% in Q4, with 1.4M SF of net absorption.
- Retail rent growth hit $24.59 per SF in Q4, up 2.8% YoY, though rent pressures are easing.
- Grocery-anchored centers and experiential retail continue driving foot traffic, while pharmacy and dollar stores face headwinds.
A strong Q4 retail leasing surge signals a positive outlook for retail REITs in 2025, with record occupancy rates and rising rents despite some industry headwinds, as reported by Bisnow.
Retail Riding High
A robust holiday shopping season helped push Q4 leasing activity to record levels for some of the nation’s largest retail REITs, driving rent growth and high occupancy rates.
Federal Realty (FRT) signed 100 deals totaling 649K SF in Q4 and 2.4M SF for the year, closing 2024 with a 94.1% occupancy rate. The company expects to hit 95% occupancy by year-end 2025.
Simon Property Group (SPG) also posted strong results, leasing 6.1M SF in Q4 and 21M SF throughout 2024, with new leases making up 25% of the activity. Mall and outlet occupancy rose 70 basis points YoY to 96.5%, while base minimum rent climbed 2.5%.
Retail vacancy rates remained tight, hovering at 5.4% in Q4, per Cushman & Wakefield, with net absorption hitting 1.4M SF for the quarter. However, analysts expect retail rent growth to moderate in 2025 as vacancy rates tick slightly higher.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Grocery, Experiential Lead
Retail REITs continue prioritizing grocery-anchored centers and experiential retail, with chains like Whole Foods (AMZN), Trader Joe’s, and Aldi driving leasing demand.
Brixmor reported a 4% YoY increase in foot traffic in January, thanks to grocery-anchored centers. Unsurprisingly, Regency Centers (REG) added $44M in incremental base rent, driven by nearly 2K deals in 2024.
“Tenant demand remains robust, and our leasing pipeline continues to set new records,” explained Regency CEO Lisa Palmer during the company’s earnings call.
Challenges Facing Pharmacies
While most retail segments are thriving, pharmacy chains and dollar stores are facing challenges. CVS Health Corp (CVS) signaled more closures in 2025 after outperforming Wall Street expectations in 2024, and Walgreens (WBA) is shuttering 1.2K locations.
Meanwhile, REITs like Agree Realty (ADC) are limiting exposure to these categories, instead focusing on auto parts and grocery retail.
Tenant bankruptcies remain a concern, with struggling brands like Joann and Forever 21 raising credit risk exposure. However, Regency Centers reported its credit loss forecast for 2025 remains consistent with historical averages.
Investing in a Shifting Market
Despite headwinds, major REITs are capitalizing on opportunities. Blackstone Mortgage Trust (BXMT) is deploying record-high cash reserves into net-lease retail properties, citing resilient demand for essential retail.
“With interest rates elevated and consumer spending stabilizing, we see a compelling setup to build a credit-oriented, diversified net lease strategy,” said Blackstone Mortgage CEO Katie Keenan.
Retail REITs enter 2025 with momentum, fueled by strong fundamentals and continued demand for high-quality retail space.
