Retail Resilience on Display: Why Optimism Should Reign at This Year’s ICSC

First published at Western Real Estate Business

May is here, and so is the moment where retail takes center stage in the commercial real estate world at the annual ICSC conference, the marquee event in this space.  While macroeconomic uncertainty and shifting global trade dynamics are dominating headlines, there’s an undeniable bright spot that deserves attention heading towards May: the continued strength of retail—particularly neighborhood and grocery-anchored assets.  In the face of inflationary pressures, evolving consumer habits, and cautious capital markets, this segment of retail real estate has proven its resilience. Investors and lenders alike are taking notice, favoring these assets for their dependable returns and stable cash flows. And with good reason.

A Fundamentally Sound Story

Well-located grocery and neighborhood retail centers have stood tall, buoyed by consistent foot traffic and a strong mix of essential goods and daily services. As CBD retail struggles to regain its footing, suburban retail continues to thrive. A limited pipeline of new development has further strengthened performance at existing centers, creating a supply-demand imbalance that works in favor of landlords.  Even amid recent closures of major pharmacy and consumer goods tenants, demand has remained strong. A growing pool of emerging and expanding retail concepts are actively seeking space, often backfilling vacant real estate. This speaks to a broader truth: retail is not just surviving—it’s evolving and thriving.

Life Companies: Steady and Reliable

Life insurance companies have leaned-in as reliable providers of debt in the retail sector. Since 2022, as banks pulled back, life companies have stepped forward, growing their CRE allocations to gain market share. They’re particularly attracted to the stability of grocery-anchored and neighborhood retail, making them a top choice for refinancing, or even transitional bridge loans.  Permanent financing is typically pricing in the mid-5% to mid-6% range, with bridge debt pricing 200 to 400 basis points higher. Still, life companies are meeting the moment, offering interest-only periods, flexible prepayment structures, and competitive terms for well-performing assets.

Banks and Credit Unions: Re-Emerging with Momentum

Banks and credit unions are regaining ground as strong sources of capital. Credit unions, in particular, have shown consistent appetite through recent volatility and continue to view retail as a core CRE lending target. While banks may be more stringent with recourse and deposit relationships, their willingness to finance single-tenant, credit-anchored assets makes them a formidable alternative to life companies in these transactions, especially for smaller loan requests. 

Looking Ahead: A Market with More Upside than Uncertainty

As we saw throughout late March and into April, turbulence in the capital markets is something we need to anticipate, and plan for.  Choppy treasury markets create opportunities for those looking to refinance.  Time is a luxury, and for those who have it, windows of opportunity will present themselves to lock in lower rates at the right time during the volatility. 

While we can’t predict exactly how the rest of 2025 will unfold, the lending environment remains fundamentally healthy for retail CRE. The key for borrowers is to act with intention: start early, understand the landscape, and position deals to align with current market dynamics. Stability in the treasury bond markets is on our wish list.   Should stability occur, the back half of 2025 could provide a very attractive window for locking in financing. This environment offers opportunity. For retail real estate professionals, the outlook heading into ICSC should be one of optimism, strategy, and momentum even if the market feels a bit challenging.