Retail REITs in Broadly Positive Position at Mid-Year


Retail REITs in Broadly Positive Position at Mid-Year


Fundamentals for retail real estate appear favorable at mid-year, supported by supply constraints and retailers’ continued commitment to brick and mortar stores as an essential distribution channel. Analysts are watching pockets of consumer stress but remain generally positive that leasing volumes and pricing power will trend higher for REITs during the rest of the year and into 2025.

REIT.com checked in with sector analysts Michael Gorman at BTIG, LLC, RJ Milligan at Raymond James, and Linda Tsai at Jefferies, LLC, for their outlook on REITs that own retail real estate.

How would you describe retail real estate fundamentals at mid-year, and what are you expecting for the rest of 2024?

Michael Gorman: As we sit at mid-year 2024, retail real estate fundamentals for strip centers are quite strong. Retailer demand is some of the strongest we have seen, certainly in the past 15 years. Coupled with a lack of new supply over the past decade, REITs in this space are seeing great leasing volumes and solid pricing power as a result. This should ultimately lead to stronger same store NOI in the back half of this year and into 2025 as the new leases come online and the gap between signed and occupied space shrinks.

The one hold-up on the fundamental front that is getting increased attention is the capex required for backfilling vacant spaces in retail portfolios. That would moderate some if occupancies stabilize, but it is a focus right now...

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RSK: All signs point to strong retail outlook for the next quarter.

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- - Volume: 24 - WEEK: 31 Date: 7/30/2024 2:27:21 PM -