Broader Market Finally Recognizing the Strength of Strip Centers

"After years of limited new construction and steady leasing demand, many markets are operating near historically low vacancy levels and rent growth has remained positive even amid broader economic uncertainty," Siegel said.

"That essential role, combined with constrained supply, supports low vacancy and consistent cash flow, positioning neighborhood and strip centers for long term stability and reliable performance."

Retail Capital Flowing Toward Population Migration Markets

To understand where retail capital is flowing, one of the simplest ways is to follow population migration trends, Siegel said.

The Sunbelt continues to capture a significant share of retail investment, with markets like Atlanta and Dallas leading the charge.

"We are also seeing strong momentum in Orlando and Charlotte, as both cities attract new residents, corporate relocations and sustained job growth that support long term retail demand," Siegel said.

"We are also seeing investors target select secondary growth markets in the broader Sunbelt where pricing remains attractive relative to primary coastal metros."

At the same time, certain coastal markets continue to command attention. In California, select pockets, particularly in the southern region, remain highly sought after.

Orange County and San Diego consistently draw investor interest due to their strong household incomes, supply constraints and historically durable consumer spending.

After several years of uncertainty, the market has largely adjusted to the new interest-rate normal, with buyers and sellers increasingly finding common ground to complete transactions, particularly in retail, according to Siegel.

"Unlike industrial and multifamily, retail cap rates, except for certain new-construction single-tenant net-lease deals, never compressed to the extremely low levels seen in other asset classes," Siegel said.

"That relative pricing discipline helped the sector weather recent volatility, as buyers were often still able to make deals pencil even when utilizing debt at higher rates."

While Siegel said he does not expect a return to the ultra-low-rate environment of 2021, inflation has moderated and monetary policy has become more predictable, creating greater confidence in underwriting.

"With the rate environment stabilizing and expectations that borrowing costs may gradually ease, retail has moved to the forefront as a compelling acquisition target for many investors," he said.

Retail's New Generation of Tenants

For a long time, many believed e-commerce would ultimately displace traditional retail, and during COVID, it certainly felt that way as consumer behavior shifted almost overnight.

What has occurred since then, however, tells a much more nuanced story.

While certain segments, such as malls and former anchor tenants like Sears and JCPenney, have faced real challenges, a new generation of retailers has stepped in to fill the void.

Apparel brands such as Vuori and Alo Yoga are aggressively expanding, lifestyle concepts like Warby Parker continue to scale their brick-and-mortar presence and value-oriented chains such as Five Below are growing rapidly.

On top of that, Siegel said, the food and beverage sector has been a major driver of demand, with brands like Dutch Bros, Starbucks and Raising Cane's expanding their footprints nationwide.

"So rather than disappearing, retail has evolved," Siegel said.

"Today's environment is defined by experiential, service-oriented, and value-driven concepts. Tenants are prioritizing strong co tenancy, visibility, and access to dense residential populations, and in many markets, that has translated into low vacancy rates and steady rent growth across open-air retail formats."

Private Investors Reshaping the Landscape

Private investors have been reshaping the landscape for years now. Historically, there was a clear distinction between what institutional buyers pursued and what private capital targeted, but that line has blurred considerably.

Today, Siegel said, it is not uncommon to see private investors acquire assets in the $25-million to $50-million range, even with some transactions exceeding $100 million.

"As institutions and REITs continue to operate within strict investment parameters, that discipline has created openings in the market," he said.

"Private capital has stepped in to fill those gaps, often moving more quickly and flexibly. Importantly, they have not just participated, they have performed."

In many cases, Siegel said, private investors have helped sustain transaction volume and provide liquidity during periods of uncertainty, playing a meaningful role in keeping the market active. Family offices and 1031 exchange buyers have remained active participants in this environment.