The Zacks REIT and Equity Trust - Retail industry appears well-placed for growth as need-based retail gains momentum. Centers anchored by grocery, discount, healthcare and other essential tenants enjoy steady traffic and more dependable leasing demand. Limited new supply also supports rents, occupancy and property values. 

Physical stores continue to play an important role as shopping destinations, pickup and return points and local fulfillment hubs, enhancing the value of quality retail space. Companies such as Simon Property Group (SPG Quick QuoteSPG - Free Report) , Kimco Realty (KIM Quick QuoteKIM - Free Report) and Regency Centers (REG Quick QuoteREG - Free Report) are positioned to benefit. Still, economic and geopolitical uncertainty could pressure discretionary spending and leasing activity.

Industry Description

The Zacks REIT and Equity Trust - Retail industry comprises REITs that own, develop, manage and lease various retail properties, including regional malls, outlet centers, grocery-anchored shopping venues and power centers with big-box retailers. Net lease REITs focus on freestanding properties, where tenants bear rent and most operating expenses. Retail REIT performance is significantly impacted by economic conditions, employment levels and consumer spending trends. Key drivers of demand include the geographic location of properties and the demographics of surrounding trade areas. While the industry faced significant challenges from declining foot traffic, store closures and retailer bankruptcies in the past, it is now experiencing a rebound, driven by renewed consumer interest in in-store shopping, signaling a positive shift in the retail landscape.

What's Shaping the Future of the REIT and Equity Trust - Retail Industry?

Need-Based Retail Is Bringing More Stable Demand: Need-based retail is emerging as a key force shaping the future of the retail REIT industry. Centers anchored by grocery, discount, healthcare and other essential tenants are better positioned because they meet everyday consumer needs. Consistent traffic helps support stable tenant demand and a more dependable leasing environment. As retailers grow more selective about expansion, properties tied to non-discretionary spending gain an edge. Going forward, performance will depend not only on size alone but also more on convenience, value, daily relevance and a strong mix of essential tenants. For retail REITs, this creates a positive path forward, especially for landlords that already own centers with a healthy mix of essential and value-oriented tenants.

Limited New Supply Is Helping Keep Fundamentals Firm: Another encouraging factor for the sector is the limited addition of new retail space. With development remaining subdued, existing properties face less competition from new projects. This creates a healthier operating backdrop, as landlords do not need exceptionally strong demand to maintain solid fundamentals. Even if leasing slows temporarily, a thin supply pipeline can keep the market from weakening too much. For retail REITs, this supports rents, protects occupancy, enhances the value of existing centers and gives owners more room to improve current assets.

Physical Stores Still Matter Even in a Digital World: Another positive is that stores now serve multiple functions beyond traditional shopping. They support pickup, returns, local fulfillment and impulse purchases linked to online orders, making quality retail space more valuable. For retail REITs, this helps sustain occupancy and strengthens the role of well-located centers in modern retail strategies. The best properties now function as storefronts, service hubs and logistics support points, making them more adaptable, relevant and difficult to replace as shopping habits evolve.

Economic and Global Uncertainty Is Keeping Consumers in Focus: The main concern for retail REITs is that consumer behavior is increasingly influenced by broader economic and geopolitical uncertainty. While spending remains intact, shoppers are becoming more cautious and selective, with a greater focus on essentials and value. This makes discretionary demand less predictable and can affect retailer confidence, store expansion and leasing activity. As a result, landlords may face a more uneven environment. REITs with strong exposure to everyday-use categories should remain relatively stable, while those tied more closely to discretionary spending are likely to encounter greater pressure ahead.

Zacks Industry Rank Indicates Bright Prospects

The Zacks REIT and Equity Trust - Retail industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #33, which places it in the top 14% of 244 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates robust near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the upward funds from operations (FFO) per share outlook for the constituent companies in aggregate. Looking at the aggregate FFO per share estimate revisions, it appears that analysts are gaining confidence in this group’s growth potential. Over the past year, the industry’s FFO per share estimates for 2026 and 2027 have moved 1.8% and 1.7% north, respectively.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.

Industry Outperforms Sector, Lags S&P 500

The REIT and Equity Trust - Retail Industry has outperformed the broader Zacks Finance sector but lagged the S&P 500 composite over the past year.

The industry has risen 24.5% during this period compared with the S&P 500’s rise of 36.5% and the broader Finance sector’s growth of 19.4%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-FFO, which is a commonly used multiple for valuing retail REITs, we see that the industry is currently trading at 17.18X compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 22.05X. The industry is trading above the Finance sector’s forward 12-month P/E of 16.38X. These are shown in the chart below.

Forward 12 Month Price-to-FFO (P/FFO) Ratio

Over the last five years, the industry has traded as high as 18.89X and as low as 12.21X, with a median of 15.15X.

3 Retail REIT Stocks to Buy

Simon Property Group: This retail REIT, based in Indianapolis, IN, is among the world’s premier retail real estate owners, with a focus on high-quality malls, premium outlets and mixed-use destinations in the United States and abroad. Its portfolio is centered on strong markets, recognized brands and differentiated experiences that help keep its properties attractive to both retailers and consumers.

As of Dec. 31, 2025, SPG held interests in 212 income-producing U.S. properties and 42 international assets, including malls, Premium Outlets and The Mills. In 2025, the company generated record real estate FFO, highlighting the strength of its platform and asset base. 

Simon Property Group’s investment case is supported by stable operations and multiple growth drivers, including redevelopments and selective acquisitions. U.S. malls and Premium Outlets ended 2025 with 96.4% occupancy, while average base minimum rent increased 4.7% to $60.97 per square foot, and retailer sales reached $799 per square foot.

SPG also returned $3.5 billion to shareholders, completed 23 redevelopments and acquired $2 billion of high-quality retail assets. This balance of stable cash generation, disciplined capital allocation and ongoing property upgrades supports a compelling long-term growth story and reinforces SPG’s appeal as a high-quality retail real estate leader.

Analysts seem bullish on this stock, with the Zacks Consensus Estimate for its 2026 and 2027 FFO per share being revised upward to $13.19 and $13.61, respectively, over the past month.

Simon Property currently carries a Zacks Rank #2 (Buy). The stock has risen 10.6% over the past three months.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: SPG

 

Kimco Realty Corporation: Headquartered in Jericho, NY, Kimco is a leading open-air shopping center REIT with a strong focus on grocery-anchored centers in affluent first-ring suburban markets.

At the end of 2025, the company had interests in 565 properties totaling roughly 100 million square feet, with 86% of annual base rent generated from grocery-anchored assets. 

This necessity-based strategy supports resilient performance, steady customer traffic and relevance across varying economic conditions. Kimco’s emphasis on premium locations, solid tenant relationships and mixed-use opportunities strengthens its ability to create lasting value.

Kimco stands out for its blend of dependable cash flow and clear growth potential. Management cited strong leasing activity, record occupancy and a large signed-but-not-open pipeline that should drive future rent gains.

In 2025, FFO per share increased 6.7%, occupancy reached 96.4%, and the signed-but-not-open pipeline climbed to a record $73 million of ABR. Backed by $2.2 billion in liquidity and strong credit ratings, Kimco remains financially well-positioned.

KIM currently has a Zacks Rank #2. The Zacks Consensus Estimate for its 2026 FFO per share has been raised marginally over the past month to $1.82, indicating a 3.41% year-over-year increase. The consensus mark for 2027 FFO per share has also been revised upward and calls for a 3.95% increase year over year. The stock has rallied 14.1% over the past three months.

 

Price and Consensus: KIM

 

Regency Centers Corporation: Based in Jacksonville, FL, Regency Centers is a retail REIT specializing in open-air shopping centers located in affluent suburban trade areas. The company owns, operates and develops a high-quality portfolio that is heavily focused on grocery-anchored properties, typically bringing together grocers, restaurants, service businesses and other necessity-driven retailers.

Its platform includes more than 480 properties, above 58 million square feet of space and more than 9,000 tenants, with more than 85% of its centers anchored by grocery stores. This broad national footprint underscores Regency’s emphasis on necessity-based retail and strong tenant quality. 

What stands out is the balance of quality and growth. At the end of 2025, the portfolio was 96.5% leased, highlighting healthy demand for its properties, while same-property NOI growth was 5.3% for the year.

The company also maintains a solid balance sheet, with net debt to EBITDAre of 5.1X, providing the flexibility to support redevelopment activity and future investments. Overall, Regency offers stable cash flows, prudent capital allocation and clear long-term growth prospects.

Regency Centers currently carries a Zacks Rank #2. Over the past month, the Zacks Consensus Estimate for 2026 and 2027 FFO per share has witnessed upward revisions to $4.85 and $5.07, calling for a 4.53% and 4.63% increase year over year, respectively. The stock has appreciated 12.9% over the past three months.

Price and Consensus: REG

Note: Funds from operations (FFO) is a widely used metric to gauge the performance of REITs rather than net income as it indicates cash flow from their operations. FFO is obtained after adding depreciation and amortization to earnings and subtracting the gains on sales.