Necessity driven grocery anchored centers among most sought-after commercial real estate investments

Grocery-anchored open-air neighborhood and community centers continue to be a favorite of CRE investors with no end in sight.

Transaction activity for these properties reached $7 billion in 2024, with deal volume growing by 34% in the second half of the year vs. the first six months, according to JLL. The average price per square foot of these transactions hit a record high of $209.

That is because of many factors, central of which is the traffic that grocery stores continue to drive to these centers since the pandemic started, and although the food service industry has fully recovered, grocery stores continue to thrive.

REIT ownership of grocery-anchored shopping centers is growing faster than private ownership, but private investors were 68 percent of the investor base in 2024, JLL data show.

All the metrics favor grocery-anchored centers, including increased foot traffic, new leasing and renewal activity, rent growth, fast food and fast casual tenants seeking co-tenancy with supermarkets and an enormous interest by services, such as medical and educational tenants, to locate in these types of shopping centers. All will be chasing deals with landlords at ICSC LAS VEGAS this month as the inventory barely meets demand.

Cushman & Wakefield reported that only 8.3 million square feet of retail space was delivered in 2024. Currently, there are only approximately 10.6 million square feet under development nationwide.

Read more: Why Investors Are Hungry for Grocery-Anchored Retail (Commercial Property Executive)