Retail REITs own and manage retail real estate and rent space in those properties to tenants. Properties include large regional malls, outlet centers, grocery-anchored shopping centers, and power centers that feature big box retailers. Despite the considerable gains in e-commerce sales and their expected strong growth, retailers have increasingly appreciated the benefits that brick-and-mortar stores provide, including marketing, order fulfillment, and product returns.
Green Street assigns grades to U.S. regional and super-regional malls. The best malls are assigned grades of A- or better; approximately 25% of malls are A-rated. The outlook for these malls tends to be bright; they also are attractively priced. Over half of U.S. malls are assigned grades of B- or worse. These malls typically face dim prospects. Publicly-traded retail REITs tend to focus on better-quality malls.
New trade policies may have elevated economic uncertainty and financial market volatility, but the net REIT investment performance effects related to tariff actions have been considerably more tempered than many investors feared. The FTSE Nareit All Equity REITs Index posted a year-to-date total return of 4.1% through August 2025. Over the same time period, the retail sector ranked sixth among the 13 public equity REIT property sectors; its total return was 5.1%.
Data from Nareit’s quarterly REIT Industry Tracker show that retail property operations have remained strong. As of the second quarter of 2025, average year-over-year funds from operations (FFO), net operating income (NOI), and same-store net operating income (SS NOI) increased by 5.1%, 5.1%, and 4.0%, respectively. The average retail occupancy rate was 96.6%, the highest rate among the four traditional property types.
0.2%
CoStar indicated that four-quarter net deliveries on a square foot basis were just 0.2% of retail stock as of the second quarter of 2025; this limited supply has benefited the sector.
16.3%
In the second quarter of 2025, the Census Bureau noted that e-commerce retail sales accounted for 16.3% of total sales.
235
In July 2025, Green Street tallied the number of U.S. malls with an A- rating or better to be 235; these malls accounted for approximately 80% of mall values.
Retail REITs have also maintained thoughtful and disciplined balance sheets. As of the second quarter of 2025, Nareit’s REIT Industry Tracker showed that the retail sector’s average leverage ratio was 34.6%. On average, fixed rate and unsecured debt accounted for 94.1% and 82.0% of total debt, respectively. Retail’s weighted average term to maturity on total debt was 6.6 years; its weighted average cost was 4.1%.
Sector Spotlight
- Constituents: 29
- One-Year Return: 3.95%
- Three-Year Return: 11.41%
- Five-Year Return: 15.81%
- Dividend Yield: 4.66%%
- Market Cap: $215.70 billion
- Dividends Paid (Q2:2025): $2.7 billion
- NOI (Q2:2025): $5.1 billion
Source: FTSE, Nareit REIT Industry Tracker | As of Aug. 31
Below is a list of Nareit member companies from the retail sector.