RETAIL INVESTMENT RUNDOWN
Written by: Grant Chaney, CCIM
Grant Chaney’s primary role at Colliers is assisting and consulting commercial real estate owners with the valuation of properties, performing in-depth analysis on investment scenarios, and representation in the sale of commercial investment properties. Prior to his current position, Grant was the analyst for Colliers | Columbus. Having a background in research and analysis enables him to bring a unique skill set to his team and clients’ portfolio. Keep reading for Grant’s take on the current trends and further thoughts on the retail investment market.
How is the retail investment market right now?
Retail may be the hottest asset class in the backend of 2022, as more investors demand positive cash flow. Due to the increases in interest rates, other asset classes are starting to experience negative leverage, but cap rates on retail assets, which have traditionally been a little higher, are still above where the market interest rates are today.
How does Q4 look for wrapping up 2022 for retail investment?
The retail investment market has experienced some headwinds as the year progressed, but it’s remained more consistent than many other asset classes from an activity and closing standpoint. We expect the annual sales volume to be down from a record breaking 2021, but still well above the ten-year average.
What do you see for the future of retail investment?
Investors will continue to seek out high quality locations with convenience-based tenants that often include food, fitness, fun and service. Many of these uses proved to be recession and pandemic-proof, so there’s a lower perceived risk among investors.
What is the biggest change you’ve seen this year?
Due mostly to the uncertainty in the national and world economies, we’ve seen investors become more risk averse than they were at the same time last year. This flight to quality is helping to maintain aggressive cap rates of top centers, even if they’ve had a slight pullback from all-time lows.