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A REIT and 4 Retail-Focused Funds Land $720M
First Washington Realty CEO: Neighborhood Retail Demand Is Surging
Burton Property Group Recapitalizes Alabama Grocery-Anchored Portfolio for $124M
Ulta Beauty Will Add 50 to 56 Stores a Year
Store Openings Top Closures as Space Tightens and Investment Climbs
Austin, Las Vegas and More: 6 Retail Markets in Hypergrowth Mode
A private REIT and four real estate funds, all of which invest heavily in retail centers, have collectively received up to $720 million in capital in the past two weeks.
Bond Street REIT, a private company that owns Class A necessity-based retail centers in the Midwest and Southeast, said affiliates of Conversant Capital have committed up to $300 million to propel Bond Street’s growth. With proceeds from the Conversant investment, Bond Street plans to spend more than $150 million to acquire retail centers. The REIT said an additional $60 million of retail acquisitions are expected to close in the coming months. Chipotle, Panera Bread and Starbucks are among the tenants with the most stores within the REIT’s 39-property portfolio.
In conjunction with the Conversant funding, properties held in separately capitalized Bond Street-advised entities will roll into the REIT.
Bond Street founder and CEO Michael Reynolds said the investment “will enable us to play offense and capitalize upon the mispricing we see in attractive convenience retail assets.”
Bond Street REIT owns Alabama’s Crossroads of Opelika, whose tenants include Aspen Dental, Chipotle and Sport Clips. Photo courtesy of Bond Street REIT
Elsewhere in the investment world, the $58.3 billion Illinois Municipal Retirement Fund has earmarked up to $145 million for investments in three funds that buy retail real estate. The retirement fund has committed:
Newport Capital Partners owns the grocery-anchored Bear Creek Shopping Center in Houston, one of 49 retail properties in its portfolio. Photo courtesy of Newport Capital Partners
The TA Realty Value Add Fund also picked up a $75 million investment from the Public Employees’ Retirement System of Mississippi. And the Connecticut Retirement Plans and Trust Funds recently committed $200 million to the TA Realty Core Property Fund, whose investments include retail properties.
MORE FROM C+CT: Money Is Moving Again in Retail Real Estate — and Fast
First Washington Realty CEO Alex Nyhan is another real estate pro who believes it’s a great time to be investing in neighborhood retail centers. In a recent interview on Commercial Property Executive’s Investment Matters podcast, Nyhan cited three drivers of neighborhood retail: robust sales, high demand for necessity-based shopping and the quest by some online retailers to establish brick-and-mortar presences. Nyhan said neighborhood retail centers are even drawing traditional mall tenants like Foot Locker and Bath & Body Works.
First Washington Realty bought The Station at Riverdale Park in Riverdale, Maryland, this year. Photo courtesy of First Washington Realty
“All in all, whether you’re us or one of our competitors,” he said, “it’s a pretty fun time to be an owner of neighborhood shopping centers.”
First Washington’s retail portfolio comprises nearly 22 million square feet across 143 properties, a spokesperson said. The company owns primarily grocery-anchored neighborhood centers, including a 163,000-square-foot Whole Foods Market-anchored shopping center in Riverdale, Maryland, that First Washington bought this year. Amid volatility in the stock and bond markets as well as devaluation of the U.S. dollar, Nyhan said he has “an even greater sense of conviction that owning the best neighborhood retail shopping center on the corner is the place we have to be.”
Burton Property Group has recapitalized three grocery-anchored centers in the Mobile, Alabama, metro for $124.3 million. The properties top 750,000 square feet.
JLL Capital Markets arranged $113.3 million — $26.6 million in preferred equity from Peaceable Street Capital, $11.4 million in additional equity and $75.3 million in debt — for three of the properties, according to Burton Property Group president and CEO Philip Burton. His company separately arranged $11 million — $7.1 million in debt and $3.9 million in equity — for a grocery shadow anchor at one of the properties.
Burton Property Group has recapitalized a grocery-anchored portfolio in Alabama that includes Jubilee Square, pictured above. Photo courtesy of JLL Capital Markets
JLL Capital Markets arranged capital for The Fresh Market-anchored Jubilee Square in Daphne, for the Rouses Markets-anchored Westwood Plaza in Mobile and for Foley Square in Foley. Burton arranged capital for a freestanding Publix that shadow-anchors Foley Square.
Additional tenants across the portfolio include Ross Dress for Less, T.J.Maxx, HomeGoods, Hobby Lobby, Ulta Beauty and Dick’s Sporting Goods. Anchor tenants represent 73% of the portfolio’s gross leasable area and 60% of base rent.
Burton intends to apply the unlocked capital to its development pipeline, including the mixed-use River Walk Plaza on Mobile’s waterfront and the 1,300-acre South Alabama Logistics Park serving the Port of Mobile.
MORE FROM C+CT: Retail Real Estate Refinancing Is Heating Up: 7 Deals To Know
Ulta Beauty may be halting its store-in-store partnership with big-box retailer Target, but that isn’t stopping the company from expanding its footprint of standalone stores, albeit on a slightly smaller scale than initially planned.
Photo credit: jetcityimage - stock.adobe.com
During Ulta Beauty’s second-quarter earnings call, president and CEO Kecia Steelman said the company is aiming for 50 to 56 new stores per year over the next two to three years. That would equate to 100 to 168 new stores over a three-year span, down from the 200 the retailer had signaled last October. Steelman, who became president and CEO in January, said the decelerated brick-and-mortar expansion isn’t related to the end of the Target deal. Ulta and Target said last month that they would conclude their store-in-store concept next August.
As Ulta Beauty proves out, retailers continue to plant more flags. JLL’s Retail Market Dynamics Q2 2025 report found that even with 7.5 million square feet of negative net absorption in the second quarter, store openings still will outpace closures this year, with 6,565 openings announced versus 5,633 closures.
A Marcus & Millichap national retail report released this week found that 2,000 more stores closed than opened in the first half of the year. Among spaces that secured new leases, it noted, average time on market dropped to nine months, compared with a four-year mean of 11 months.
JLL reported that store openings are skewing toward spaces smaller than 10,000 square feet, while the “preponderance” of store closures are larger, ranging from 10,000 square feet to 50,000 square feet. Marcus & Millichap noted that fitness and family entertainment brands — including Crunch fitness, Sky Zone trampoline park, The Picklr and Fun City Adventure Park — signed more than 200 new leases for spaces over 20,000 square feet in 2024 and the first half of 2025. Notably, most of those are 10-year terms, adding long-term stability for those properties.
Meanwhile, space remains constrained. Construction starts declined more than 50% from the first to the second quarter, vacancy sat at 4.3% at the end of the second quarter, and rent grew 2% year over year, according to JLL.
Source: JLL Q2 2025 Retail Dynamics report, citing CoStar data
Marcus & Millichap pegged end-of-the-second-quarter vacancy slightly higher, at 4.9%, though that’s 80 basis points lower than the long-term mean. “Vacancy levels are low enough to keep the average asking rent at a record mark,” Marcus & Millichap said.
Meanwhile, developers added just 7.2 million square feet in the second quarter, the lowest for a three-month period since at least 2000.
As of August, the active development pipeline equaled just 0.7% of existing inventory, and occupants have already spoken for three-quarters of that pipeline, “steering many expansion-minded retailers to existing properties through at least 2026,” Marcus & Millichap reported. Based on its forecast of 34 million square feet of deliveries for the full year, the firm said: “The volume of retail space delivered this year ranks as the smallest tally this century.”
“The volume of retail space delivered this year ranks as the smallest tally this century.”
Amid the ongoing shortage of new supply, investment activity rose 23% year over year in the second quarter to $28.5 billion, JLL’s report said.
Marcus & Millichap added that the number of deals closed during the quarter is the highest in three years, as investors chase higher returns. “Moving forward,” the firm said, “buyers with an appetite for 7%-plus yields that have experience re-tenanting assets may target community and neighborhood centers with upcoming move-outs or recently vacated former drugstores in markets noting encouraging backfilling activity.”
According to IRR’s 2025 Mid-Year Viewpoint Survey, which tracked 61 key markets, the most retail expansion is happening in:
According to IRR, signs of robust expansion include decreasing vacancy rates, moderate to high levels of new construction, high absorption rates, moderate to high rates of employment growth and medium to high rates for rental growth.
—Additional reporting by Commerce + Communities Today editor-in-chief Amanda Metcalf
By John Egan
Contributor, Commerce + Communities Today
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