Intelligent Investment

Retail Sector Provides Strong Value-Add Investment Opportunity

December 21, 2021

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Investors should reconsider their allocations to benefit from misvalued retail.
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.
Grocery-anchored retail properties are out-performers in the retail sector, a trend which is expected to continue.
Sunbelt markets are expected to produce higher internal rates of return (IRRs) benefitting from continued strong market fundamentals.

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