JLL Reports 23% Increase in Retail Real Estate Investment in 2025's First Half

What's Happening?

JLL, a global real estate services company, has reported a 23% increase in investment in retail real estate during the first half of 2025. This surge comes amid a wave of store closures by major brands such as Big Lots, Joann, and Rite Aid, which has led to a rapid acquisition of retail spaces by investors. Despite the increase in investment, the construction of new retail spaces has slowed significantly, with new starts declining by over 50% quarter-over-quarter. The report highlights a growing demand for alternative uses of retail spaces, such as multifamily and mixed-use developments, due to rising costs outpacing rents.

Why It's Important?

The increase in retail real estate investment indicates a strong interest in repurposing existing spaces, reflecting a shift in the retail landscape. This trend could benefit investors and developers focusing on mixed-use and multifamily projects, potentially leading to a transformation in urban planning and real estate strategies. However, the slow pace of new construction and the imbalance between available space quality and retailer needs could pose challenges. Retailers seeking modern, high-quality spaces may face limited options, impacting their expansion plans and potentially leading to higher rents in desirable locations.

What's Next?

As the demand for alternative uses of retail spaces grows, developers and investors may increasingly focus on converting existing properties into mixed-use or residential developments. This could lead to a reevaluation of urban spaces and zoning laws to accommodate new types of developments. Retailers may need to adapt by seeking smaller, more flexible spaces that align with current consumer trends, such as fast-casual dining and service-based businesses. The ongoing economic conditions and cost dynamics will likely influence future investment and development decisions in the retail real estate sector.