Despite economic headwinds, the single-tenant net lease retail sector was resilient during the first half. Sales volume increased, prices were stable and investors increasingly focused on high-credit tenants, according to Colliers’ retail review for the first half.
A wave of store closures, especially among underperforming and legacy brands, put upward pressure on vacancy. However demand remained strong for well-located, high-quality assets, said Colliers. This reinforced a growing divide between Class A and Class B/C properties.
Developers leaned into repositioning existing assets over speculative builds, and as a result, new construction remained limited during the first half. Growth sectors like fitness, discount and experiential dining bolstered net absorption.
Retail STNL sales volume totaled $5.7 billion during the first half, up 9.6% from the second half of 2024. The median cap rate for these transactions dropped to 6.8%, and the median price per square foot rose 8% to $309 as deal sizes grew while asset footprints declined. This highlights a long-term shift toward smaller, more liquid retail formats aligned with omnichannel strategies and disciplined capital management, according to the report.
Total convenience store sales declined 2.6% in the first half of 2025 due to lower gas prices, but in-store sales hit a record high. Reductions in non-essential spending, particularly for travel, caused a 4.7% decrease in average visits to convenience stores, according to Colliers. Convenience store sales volume grew by nearly 16% over the second half of 2024 and maintains investor appeal with consistently low cap rates, said Colliers.
Meanwhile, drug stores are experiencing higher demand from an aging population for prescription medications. However, this category remains under pressure due to lower pharmacy reimbursement rates and soft front-end sales. Average visits to drug stores and pharmacies declined by 3.6% in the first half of 2025, reflecting the continued impact of widespread store closures among leading chains.
Discount and dollar stores logged a 2.9% increase in foot traffic during the first half as their core consumers remain financially constrained. Many discount and mass-market retailers — including Dollar Tree and smaller chains like Fleet Farm and Variety — are expected to feel the brunt of tariff impacts due to their heavy reliance on low-cost imported goods, Colliers warned.
Financial constraints also are hitting full-service restaurants, where visits declined by 1.6% during the first half. Lower-income consumers have scaled back spending on dining out, and full-service restaurants have introduced promotions, value deals and enhanced loyalty programs to regain market share.
Visits to quick service restaurants also fell during the first half, a trend Colliers attributed to reduced commuting and fewer long-distance trips. Fast food restaurants are increasingly implementing technology and automation to combat ongoing labor shortages, including self-order kiosks, AI drive-thru systems and kitchen robots.
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