Retail property is expected to deliver landlords annual returns of 9.5% in 2026 after outperforming other sectors in 2025, analysis from Knight Frank shows.<\/p>\n
Businesses are now refocusing on having a physical premises after online penetration flatlined, while Shopping Centres and Foodstores lead the way in terms of retail\u2019s success.<\/p>\n
Sam Waterworth, partner, high street \u2013 capital markets, Knight Frank, said: \u201cRetail has decisively turned a corner with 2025 marking the high street\u2019s rebound.<\/p>\n
\u201cOccupational markets are the strongest they\u2019ve been in over a decade and pricing has rebased, which is clearly reflected in retail\u2019s total return performance.<\/p>\n
\u201cRetail\u2019s high income return and improving rental dynamics continue to attract capital, with an increasing numbers of investors deploying where cashflows are durable and risk is appropriately priced.\u201d<\/p>\n
Total retail investment volumes are forecast to reach \u00a35.83bn in 2025, down 17% year-on-year and 8% below the 10-year average, with the shortfall largely driven by a lack of available stock rather than weakening demand.<\/p>\n
However with pricing strengthening and rental growth feeding through, transaction levels improved meaningfully in the second half of the year and momentum is expected to carry into 2026.<\/p>\n
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Retail delivered 9.2% total returns year-to-date to Q3 2025, the strongest performance of all traditional property sectors, outperforming Industrial (9.1%), Offices (3.2%) and All Property (6.6%).<\/p>\n
Shopping Centres and Foodstores each delivered annual returns of +10.2%, underscoring the increasingly broad-based nature of the retail recovery.<\/p>\n
The latter saw transactions accelerate sharply in the second half of the year, with \u00a31 billion worth of property traded.<\/p>\n
High Street retail also saw a meaningful rebound in activity, with \u00a3420m transacted in H2 2025, a 150% increase on H1. Competitive bidding has re-emerged in prime centres and regional cities, supported by the strongest rental growth in the retail market, forecast at +6.9% for 2025.<\/p>\n
Will Lund, Partner, head of retail \u2013 capital markets, Knight Frank, added: \u201cWith online penetration flatlining and retailers reinvesting in physical space, the narrative around retail has fundamentally changed.<\/p>\n
\u201cShopping Centres and Foodstores are now leading performance across all real estate, while Retail Warehousing remains the occupational darling.<\/p>\n
\u201cAcross the board, retail is a holistically investable sector. We have great confidence that this demand is going to drive a return to decade-high investment volumes in 2026 and we are expecting a busy year across all of the subsectors.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Retail property is expected to deliver landlords annual returns of 9.5% in 2026 after outperforming other sectors in 2025, analysis from Knight Frank shows. Businesses are now refocusing on having a physical premises after online penetration flatlined, while Shopping Centres and Foodstores lead the way in terms of retail\u2019s success. Sam Waterworth, partner, high street […]<\/p>\n","protected":false},"author":1,"featured_media":7109,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-7108","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-home"],"yoast_head":"\n