Retail investment hits mid-cycle sweet spot as buyer demand outpaces seller supply

CHICAGO, June 30, 2026 – The U.S. retail real estate market has hit its stride. Buyers are circling properties with renewed confidence while sellers are holding tight, creating a dynamic that's pushing prices up and compressing cap rates across the board. According to JLL's 2026 U.S. Retail Thematic Outlook and Investor Survey, 64% of investors plan to ramp up their retail acquisitions this year, but only 48% expect to sell more. That’s a gap that's setting up one of the most competitive environments the sector has seen in years.

The survey of nearly 150 retail investors shows that 56% see the market as mid-cycle, which is good news. It means fundamentals are strong, rents and occupancy are climbing, but we haven't hit the frothy peak where pricing loses touch with reality.

"We're seeing a level of investor conviction in retail that we haven't witnessed in over a decade," said Executive Managing Director and Co-Leader of the Retail Group Danny Finkle. "Retail now commands 14% of U.S. sector investment, its highest share in 10 years, and trailing 12-month volume hit $62 billion, marking a 31% increase. The fundamental driver is clear: there's not much new supply coming, vacancies are low and consumers keep showing up. That's creating real landlord pricing power, and investors want in."

What's particularly interesting is how investor strategies are evolving. A striking 68% said they'd rather chase higher yields in secondary or tertiary markets than pay premium prices in primary markets. And the data backs up that approach. Secondary and tertiary markets, like Charlotte, San Diego, Orlando, Denver and Kansas City, are posting 4.3% year-over-year rental growth for grocery-anchored centers compared to 3.7% in primary markets.

Everyone still loves grocery-anchored retail, in fact, 81% of investors include it in their plans. But power centers have quietly become just as hot, with 73% of investors now targeting them. Cap rates between the two formats have compressed to just 50 basis points apart, which tells you investors see them as pretty much equally attractive.

"The convergence in pricing between grocery-anchored and power centers reflects how investors have gotten more sophisticated in evaluating retail," added Senior Managing Director and Co-Leader of the Retail Group Chris Angelone. "Both formats deliver what consumers need no matter what's happening in the economy. Whether it's Whole Foods or TJX Brands, these centers generate consistent foot traffic and sales that translate into steady returns."

When asked which tenants they favor most, investors overwhelmingly picked the essentials. Whole Foods topped the list, followed by TJX Brands, with Trader Joe’s, Target, Lululemon and Publix following closely. Grocery and discount department stores alone represented 56% of all the retailers investors mentioned. This is a clear signal that the strategy right now is all about non-discretionary categories that hold up through any economic weather.

The financing side of the equation has improved dramatically too. The number of lenders actively quoting retail deals has jumped 115% since the Q4 2023 low point. Retail lending spreads have tightened to within nine basis points of industrial and 16 basis points of multifamily, showing that lenders are starting to see retail as a quality bet again.

"Institutional capital is fundamentally reshaping how retail investments get managed," said Senior Managing Director and Co-Leader of the Retail Group Chris Gerard. "Institutions now make up 24% of retail investment activity, and they're taking a much more active approach. We're seeing five-year hold periods instead of the traditional long-term buy-and-hold. It's all about maintaining flexibility and keeping an eye on who the next buyer might be in what's become a really liquid market."

The concerns keeping investors up at night have shifted too. Economic slowdown and geopolitical uncertainty now rank as the biggest worries, cited by 69% of respondents. That's a dramatic change from just two years ago when everyone was stressed about whether they could even get financing.

New development remains a sticking point. Investors are split right down the middle on whether to pursue ground-up projects. The appeal is obvious: new properties command premium rents and often pre-lease before construction wraps. But construction costs are making the math tough, with many projects struggling to hit target yields.

With only 7.8 million square feet of new deliveries in Q1 2026, which is 25% below the ten-year average, the supply squeeze isn't letting up anytime soon. That's great news for existing property owners but makes finding deals that much harder for buyers.

The bottom line? This is shaping up to be one of the most dynamic periods for retail real estate in recent memory. Investors who can move fast, get creative with deal structures and accept tighter returns are going to win. For everyone else, it's going to be a challenging hunt for quality assets in an increasingly crowded field.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The group’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients, including investment sales and advisory, debt advisory, M&A and corporate finance, loan sales, equity & fund placement, net lease, derivative advisory and energy & infrastructure advisory. JLL Capital Markets has more than 3,000 specialists worldwide with offices in nearly 50 countries.

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Please reach out to Gréta Kieras for a copy of JLL's 2026 U.S. Retail Thematic Outlook and Investor Survey.

JLL (NYSE:JLL) is a leading global commercial real estate services and investment management company with annual revenue of $26.1 billion, operations in over 80 countries and a global workforce of more than 113,000 as of March 31, 2026. For over 200 years, clients have trusted JLL, a Fortune 500® company, to help them confidently buy, build, occupy, manage and invest across a variety of industries and property types, including office, industrial, hotel, multi-family, retail and data center properties. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY. Powered by rich global datasets and leading technology capabilities, we provide coordinated, end-to-end delivery of real estate services for a broad range of global clients who represent a wide variety of industries. Through LaSalle Investment Management, we invest for clients on a global basis in both private assets and publicly traded real estate securities. For further information, visit jll.com.