Retail Resilience and Capital Confidence Mark a Steady Industry Outlook

ICSC 2025 Las Vegas: Retail Resilience and Capital Confidence Mark a Steady Industry Outlook

At the ICSC 2025 Convention in Las Vegas, a tone of cautious optimism pervaded the air as industry leaders, developers, retailers, and investors gathered to assess the current landscape and outlook for retail real estate. While macroeconomic uncertainties lingered in the background, conversations at the event reflected a strong belief in the resilience of retail and a confidence in capital markets that has not been seen in years.

Capital Markets Signal Continued Strength

One of the most resounding themes of the convention was the stability and strength of capital markets. Chief Acquisitions Officer Eric Zimmermann emphasized this point, stating, “Investment sales continue unabated regardless of deal size,” and noted that “The latest capital to enter the market are investment manager core funds.” These funds, typically known for conservative, long-hold strategies, signal a renewed confidence in retail’s long-term viability as a core asset class.

President and Chief Investment Officer Kenton McKeehan echoed Zimmermann’s sentiments, sharing that there is “more capital interest in retail than any of the last 10 years, interest even across all the various risk spectrums.” This broad-based interest reflects a shift in perception about retail assets, particularly as investors seek diversification and yield in a higher interest rate environment. While office and multifamily sectors continue to face headwinds, retail—especially well-located open-air centers and necessity-driven tenants—has remained an attractive proposition.

Retailers Push Forward with Expansion

Despite whispers of an economic slowdown and projected softness in consumer spending, particularly in the upcoming holiday season, retailers appear undeterred in their expansion plans. According to McKeehan, “Despite some broader economic cautiousness, no changes to retailer growth plans were communicated, no deals have been pulled to date.” He added that “Retailers are expecting some sales softness in Q4 but the impact will not be evenly felt,” suggesting that while discretionary categories might face pressure, essential retail and value-driven concepts remain robust.

Executive Vice President of Leasing Greg Ix supported this observation, stating, “Retailers are already filling up their 2026 pipeline,” and noted that “most buying is 9 months out.” Even with potential global economic pressures, including lingering effects from tariffs, Ix affirmed that “Tariffs are not stopping any deals. Retailers are taking a little more cautionary approach, but deals are getting approved.” The strategic, forward-looking nature of these deals reflects a maturity in how retailers are adapting to market challenges.

Operational Adaptations and Market Constraints

One of the notable trends discussed at the convention was the way retailers are adapting to increasingly tight real estate markets. With limited vacancies in prime locations, retailers are being forced to adapt their formats. As Ix put it, “Retailers are coming out of their prototypical footprints to secure new store locations with limited vacancy in the market. Probably not good for their long-term health.” This shift demonstrates both the pressure to grow and the constraints in available high-quality space, leading to compromises that may not align with traditional operational models.

Interestingly, Ix also remarked on a notable silence at the show: “No new development was talked about.” This suggests a moment of equilibrium in the market—neither exuberant expansion nor panicked contraction. The absence of new development chatter may be tied to high construction costs and uncertainty in capital markets for ground-up projects.

Stability in the Tenant Base

A significant factor contributing to the market’s optimism is the perceived health of the tenant base. Zimmermann reported that, “The list of troubled tenants remains in check,” indicating a broad stabilization among occupiers. Unlike in past cycles, where softening sales led to a cascade of bankruptcies and rent concessions, the current market reflects a more measured and resilient retail tenant environment.

This sentiment was reflected in expectations for increased activity later in the year. McKeehan noted, “The market is expecting to see increased sales/transactional activity in Q3/Q4,” pointing toward a potentially strong finish to 2025 as capital becomes more mobile and retailers finalize plans for 2026 and beyond.

A Market in Maturity

The tone of the ICSC 2025 Convention was not one of exuberance but rather of pragmatic progress. The industry appears to be entering a new phase—one marked by capital discipline, operational adaptability, and strategic growth. The absence of speculative development, a restrained rumor mill, and robust capital interest reflect a sector that has matured significantly from the volatility of the past decade.

As one seasoned attendee remarked off-record, “It feels like the industry has grown up.” That maturity—rooted in lessons from past cycles and a deeper understanding of consumer behavior—is perhaps the most promising sign of all.