Retail CRE Surges with 43% Jump in Investment Sales Article originally posted on Globe St. on November 6, 2025 Investor confidence in retail real estate is surging as the sector posts its strongest quarter in three years, driven by resilience and select fundamentals that are drawing both longstanding and new capital back into the market. Sales volume surged more than 40% in the third quarter of 2025 compared with the same period a year earlier, according to Newmark’s latest retail conditions and trends report. Roughly $16.1 billion in assets changed hands during the quarter, while total retail capital markets activity climbed to $45.8 billion—29% higher than a year ago. Also, property values rose 3.5% year over year as of September, marking the strongest annual gain among all asset classes. Cap rates averaged 6.84% in the third quarter, down from 7.15% a year earlier, while the gap between lending and cap rates narrowed to 62 basis points as borrowing costs eased slightly. Sunbelt markets remained the sector’s standouts. Dallas, Houston, Phoenix, Orlando and San Antonio led absorption among large markets, while Austin, Jacksonville, Tulsa, Raleigh and El Paso followed with strong results too. Northern New Jersey was a bright spot in the Northeast, though markets such as Seattle and Los Angeles lagged. Occupier demand showed fresh signs of life. After two soft quarters, retail recorded 1.1 million square feet of positive net absorption in the third quarter—a potential signal that tenant hesitation is fading. Closed stores are being replaced quickly as healthy demand meets limited prime inventory, and retail REITs’ signed-not-open pipelines, with move-ins extending through 2027, continue to support low availability. Reported retention rates ranging from 75% to 94% further strengthen the picture. Overall availability rose to 5.3%, up 30 basis points from last year but still below the long-term 6.6% average. Leasing volume totaled 31.1 million square feet in the quarter, about 30% below the 10-year norm, with freestanding properties, power centers and Class B malls outperforming. Asking rents declined both quarter-over-quarter and year-over-year for the first time in a decade, weighed down by obsolete space that now accounts for a significant share of availabilities. Newmark noted that about 260 million square feet of retail property—roughly 48% of total available space—has been on the market for two years or more, an all-time high. Even so, the firm expects availability to remain far healthier than during the pandemic or the Great Financial Crisis. Despite headwinds from tariffs and inflation, consumers continue to spend, supporting categories such as food services, bars, health and beauty and specialty retail. Non-store retail also rose 2% month-over-month in August, boosted by back-to-school sales. “Retail CRE has navigated every obstacle,” Newmark’s report concluded. “Strong fundamentals have encouraged current investors to add to their portfolios, attracting new capital and amplifying market momentum.”