Retail is a particularly dynamic sector of commercial real estate (CRE) characterized by fierce competition and constant evolution and innovation. It’s a challenging yet often rewarding avenue for investment.
Retail-focused real estate investment trusts, or REITs, offer a balanced approach to investing in the retail sector because they provide liquidity, diversification, and the potential for stable income and capital appreciation.
REITs give investors the opportunity to buy into income-generating real estate assets without the hassles of direct ownership.
If investing in a retail REIT piques your interest but you’re not sure where to start, we’ve put together a list of eight of the top retail REITs in the US.
Criteria for Selection
In selecting the top eight retail REITs, we’ve considered several factors, with market capitalization (often referred to as ‘market cap’) being one of the primary criteria for ranking these companies.
Market cap is the total value of a company's outstanding shares of stock, calculated by multiplying the stock's current market price by the total number of outstanding shares.
A larger market cap often indicates a more established and financially stable REIT.
We've also examined other key performance indicators, industry reputation, and property portfolios.
Note that market cap, dividend yield, and stock price are constantly fluctuating metrics. We’ve used the latest data from stock research site, WallStreetZen to source our figures.
Market Trends in Retail REITs
Before we explore the list of top retail REITs, let's take a moment to look at a few of the current market trends that influence this sector:
Impact of E-Commerce
Since more consumers are preferring to shop online, the growth of e-commerce has had a tremendous impact on the retail industry. Retail REITs have had to adjust in a few different ways, such as:
- Repositioning their locations
- Exploring multichannel methods
- Concentrating on experiential retail
Retail tenants need to offer distinctive ‘offline’ or in-person experiences and goods that are difficult to duplicate online. This applies to grocery stores, restaurants, fitness centers, and entertainment venues, among others.
Changing Consumer Behavior
Consumer behavior and preferences are always shifting.
It’s essential that retail REITS keep up to date with the latest trends in order to anticipate and satisfy consumer demands.
Careful coordination of tenants is a must, as having the right, complementary mix of retail stores can often make or break a shopping experience.
New Sectors
An interesting shift in CRE, according to Nariet, is how the ‘traditional’ CRE sectors of residential, office, retail, and industrial have mostly given way to new and developing sectors including data centers and self-storage.
Infrastructure such as cell and communication towers also make up a large chunk of the ‘new’ sectors.
Top Retail REITS in the United States
Let’s take a look at the top retail REITs in the United States, along with their unique attributes and selling points (USPs), and recent performance data.
1. Simon Property Group (SPG)
Simon Property Group (SPG) is one of the largest and most diversified retail REITs in the US. It is known for its high-quality properties and strong tenant relationships.
SPG specializes in a wide range of real estate properties, including shopping malls, premium outlets, and mixed-use properties.
They own iconic shopping centers like The Mall of America – one of the largest malls in the US. They also partner with a wide range of luxury brands and retailers, including:
- Louis Vuitton
- Prada
- Dolce & Gabbana
- Valentino
- Jimmy Choo
Luxury brands often operate boutiques or stores in SPG's upscale shopping centers and malls, catering to affluent shoppers in prime locations. Specific brands and retailers change based on market demand and tenant agreements.
2. Realty Income (O)
Realty Income (O) has a diverse portfolio of retail and commercial properties. They specialize in buying freestanding, one-unit buildings that are long-term net leased.
Realty Income is renowned for its monthly dividend payments and its status as a ‘Dividend Aristocrat,’ with a long history of increasing dividends.
Realty Income doesn’t focus on luxury or upscale properties, but they are known for their stable and consistent income streams from a broad array of tenants.
With a combined portfolio of more than 6,400 sites in the United States, Puerto Rico, and the United Kingdom, these companies include:
- Walgreens Boots Alliance
- Dollar General Corp
- 7-Eleven
3. Kimco Realty (KIM)
Kimco Realty, a nationwide company, focuses on grocery-anchored, neighborhood shopping centers and mixed-use properties.
Kimco Realty focuses on convenience and community-oriented retail. Notable properties can vary depending on the region.
They aim to create successful partnerships with tenants that benefit both parties. This contributes to their long-standing presence and reputation with CRE.
4. Regency Centers (REG)
Specializing in grocery-anchored shopping centers, Regency Centers (REG) stands out with a keen focus on high-traffic, necessity-based retail properties. It also has an impressive track record of value creation. With a nationwide presence, their focus is on major markets.
REG owns 480 shopping centers nationwide, totalling over 56million square feet of prime retail space (according to their website).
Some of REG’s notable properties include:
- The Market Common Clarendon in Arlington, Virginia
- Sunset Harbor Shops in Miami Beach, Florida
REG places a strong emphasis on collaborating with top grocery store anchors and providing essential services to communities. They also prioritize curating a mix of retail tenants that align with the local market and demographic.
5. Federal Realty Investment Trust (FRT)
Federal Realty (FRT) is a US-based company that specializes in high-quality retail properties. These include shopping centers and mixed-use developments in prime locations.
Their claims to fame revolve around their emphasis on prime locations, strong tenant relationships, and a track record of consistent good performance.
FRT primarily focuses on the East Coast and West Coast's largest cities, attracting well-known brands to their properties. Their prominent properties include:
- Santana Row in San Jose, California
- Assembly Row in Somerville, Massachusetts
6. NNN REIT (NNN)
NNN REIT (NNN), formerly known as National Retail Properties, specializes in single-tenant, triple-net retail properties. The company is known for its long-term, stable income, and consistent dividends.
According to their website, they operating nationwide across 49 states, NNN has 3,449 properties which they leases to over 380 retailers across 37 trade lines. This extensive portfolio includes:
- 7-Eleven
- Mister Car Wash
- Camping World
- Flynn Restaurant Group (Taco Bell/Arby's)
7. Brixmor Property Group (BRX)
A major US open-air retail operator, Brixmor Property Group (BRX), has over 65 million square feet of prime retail space distributed across 365 shopping complexes (as stated on their website). Their primary focus is on community and neighborhood shopping centers.
They are known for making the most of steady foot traffic and the demand for vital retail goods by careful positioning in these locations.
A few of their well-known developments include:
- Pointe Orlando, Florida
- Westminster City Center, Colorado
- Old Bridge Gateway, New Jersey
- East Port Plaza, Oregon
- Dickson City Crossings, Pennsylvania
8. Agree Realty Corporation (ADC)
Single-tenant, net-leased retail assets are the expertise Agree Realty Corporation (ADC) is known for. A priority for them is creating long-term lease agreements with a variety of retail tenants.
As stated on their website, the company oversees 2004 properties spread throughout 49 states, amounting to 42million square feet of retail space.
Noteworthy properties and partnerships in Agree Realty's portfolio include leases with prominent retailers such as:
- Home Depot
- TJ Maxx
- AutoZone
- CostCo
- Dollar General
Top Retail REITs: Final Thoughts
These top US retail REITS provide a diverse range of investment opportunities, from high-yield dividend payers to those with a reputation for stability and resilience against market fluctuations.
As a CRE investor, diversifying your portfolio with a mix of these top-performing REITs could be a strategic move for both income and capital growth.
Now that you're equipped with this knowledge, the next step is to delve deeper into each of these REITs, evaluate your investment goals, and make your move in the retail REIT market.
