RED BANK, NJ – Aug. 21, 2025 – First National Realty Partners (FNRP), a leading national private equity commercial real estate firm, anticipates retail real estate fundamentals to remain relatively strong through the remainder of 2025, driven by sustained demand for grocery-anchored and other necessity-based properties. While macroeconomic uncertainty persists, tight supply, healthy leasing activity and stable cash flows are creating favorable conditions for landlords and investors.
Retail Demand Outpacing Supply
The retail real estate sector is expected to remain resilient through the rest of 2025, as grocery-anchored and other essential-service retail centers continue to demonstrate consistent performance. Robust demand from tenants, combined with limited new construction, is projected to sustain elevated occupancy levels.
FNRP’s recent leasing activity reflects these trends, with more than 700,000 square feet of transactions executed year-to-date across its portfolio. Retail vacancies are expected to remain stable or edge slightly higher, staying well below historical averages. Grocery-anchored shopping centers and power centers are positioned well compared to other retail formats, with discount and value retailers and food service operators driving much of the demand for space.
“Even as some brands have adjusted expansion plans due to economic uncertainties, overall demand for prime necessity-based retail space remains high,” said Sam Collier, Chief Revenue Officer at FNRP. “We continue to see momentum from tenants like Aldi, Dollar Tree, Dollar General, TJX Companies, Hibbett Sports, Jersey Mike’s, Wingstop and Raising Cane’s, all of which align with consumer preferences for value, convenience and experience.”
Macroeconomic and Development Outlook
The tariff policy created early-year volatility in equity and debt markets, temporarily slowing transaction volume. However, more quality assets are now coming to market, setting the stage for what is likely to be an active close to 2025.
“With rent growth at one of its strongest levels in years and high construction costs limiting new development, existing retail assets are well-positioned for rent growth,” said Michael Hazinski, Chief Investment Officer at FNRP. “For well-capitalized buyers like FNRP, this creates opportunities to act decisively when the right assets come available for sale.”
While some retail segments may experience a softer consumer environment, careful underwriting and targeted asset selection are expected to sustain performance through year-end, especially for centers anchored by essential goods and services.
Investment Strategy and Financial Optimization
Lender appetite for necessity-based retail remains high, with well-located grocery-anchored and necessity-based centers securing competitive financing terms as lenders appear to be viewing them as lower risk. Meanwhile, heightened scrutiny is driving tighter underwriting standards, with greater focus on tenant quality, lease duration and trade area demographics.
FNRP continues to apply this disciplined approach while optimizing its portfolio, recently refinancing one asset, completing one disposition and acquiring three properties.
“As underwriting is looked at more closely than ever before, it is critical to pair a rigorous review of asset-level fundamentals with a clear long-term plan,” said Ben Matheson, Head of Investor Relations at FNRP. “That means understanding not just how a property performs today, but how it is positioned to deliver value throughout changing market cycles.”
Opportunities and Policy Tailwinds
Attractive acquisition opportunities remain in the retail real estate sector, particularly in the Sunbelt markets with significant population growth. Necessity-based assets continue to deliver essential services while offering investors the potential for stable cash flow, making them a compelling investment option across different market cycles.
The recent reinstatement of 100% bonus depreciation through the “Big Beautiful Bill” is a favorable tailwind, allowing FNRP to accelerate depreciation on eligible property components and enhance after-tax returns for new acquisitions.
A Strategic Path Ahead
Through the end of the year, FNRP will focus on disciplined underwriting, active asset management and acquisitions aligned with long-term growth. Each property will continue to be managed according to its specific business plan, guided by asset-level performance and market conditions.
Disclaimer: This market outlook and review is provided for informational purposes only. The information contained herein reflects the current views, estimates, and/or opinions of First National Realty Partners as of the date hereof, which are subject to change without notice. Past performance is not indicative of future results. All projections, forecasts, or forward-looking statements are based on assumptions that may not prove to be accurate. Actual results may differ materially due to various risks and uncertainties, including but not limited to market conditions, changes in economic environments, and operational factors. Investments in commercial real estate involve significant risks, including loss of principal, and may not be suitable for all investors. You should consult your own legal, tax, accounting, or investment advisors before making any investment decision.
About First National Realty Partners
First National Realty Partners (FNRP) provides accredited investors with access to institutional-quality commercial real estate, specializing in necessity-based retail nationwide. From acquisition to disposition, FNRP oversees the entire investment lifecycle through its vertically integrated platform. Leveraging top in-house talent in legal, acquisitions, leasing, and other key areas, FNRP creates sustainable value for its investors. For more information, please visit www.fnrpusa.com.
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Jessica DeMarino
jdemarino@fnrpusa.com
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