2025 Mid-Year Global Investment Outlook: Retail

2025 Mid-Year Global Investment Outlook: Retail

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The Retail Sector

According to policyuncertainty.com, global policy uncertainty is at an all-time high (as of April 2025), exceeding previous highs experienced during the pandemic. In addition, retailers are particularly exposed to tariffs given their already thin margins and abundance of Chinese-produced inventory, which adds additional risk to the retail sector.

Previously tight retail fundamentals in the U.S. have softened a bit but remain above average due to the lack of new supply over the past 15 years, as well as the razing and redevelopment of previously struggling centers. Over the past decade, the retail sector has sorted out the winners and losers. The winners are able to generate competition amongst tenants, thereby driving rent growth, while the losing centers are effectively obsolete. 

Key Takeaway:

Retail dynamics in key developed Asia markets are increasingly appealing with fundamentals on an upward trajectory since the end of the pandemic.

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The Opportunity:
Grocery-anchored retail in the U.S. could present the top opportunity for retail

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With the exception of Hong Kong, retail supply in developed Asia is a fraction of its peak a decade ago, with completions off 75% in 2024. Given the region’s rapid growth, retail dynamics in Asia are increasingly appealing with fundamentals on an upward trajectory since the end of the pandemic. Europe is a bit behind the U.S. in the retail sorting process, but fundamentals have stabilized and given its lower space per capita, the process won’t likely take as long to play out. With attractive pricing relative to other sectors, retail acquisitions in Europe are increasingly attractive.

Disclaimer


The content herein and in the report is provided for informational purposes only. Nothing above or in the report constitutes investment, legal, or tax advice or recommendations. Such content should not be relied upon as a basis for making an investment decision and is not an offer of advisory services or an offer to invest in any product or asset class. It should not be assumed that any investment in an asset class described herein will be profitable. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice. Opinions or beliefs expressed in these materials may differ or be contrary to opinions expressed by others. Certain information above and in the report has been obtained from third-party sources. Hines has not independently verified such information.