The Innovating Commerce Serving Communities (ICSC) conference returned to New York this December, bringing together 7,800 professionals from the retail industry at the Jacob K. Javits Convention Center. This year’s event buzzed with optimism and persistent dealmaking despite challenges like bankruptcies and store closures. With the retail sector drawing increased attention compared to other asset classes, the convention highlighted one of the industry’s most pressing issues: finding space for retailers in one of the tightest markets in recent memory. Over two days, dealmakers and experts shared the following insights driving innovation and evolution in the retail landscape:

  1. Retail space availability is at its lowest on record, signaling a tight market where demand continues to grow. Limited space availability is expected to drive rent growth in 2025.
  2. Retail capital markets have seen a significant drop in transactions over the last two years, but this scarcity drives competition and firm pricing for available assets.
  3. Smaller assets ($10–$25M) attract a broader buyer pool, including high-net-worth individuals, family offices, and hedge funds, while more significant deals typically see fewer bidders.
  4. REITs maintain a competitive edge through favorable public bonds and equity market financing options. Stability in interest rates anticipated by the first quarter of 2025 could further boost transaction confidence and activity.
  5. Zoning policies should adapt to market conditions, avoiding mandated retail use during periods of high vacancy and encouraging creative reuse of underutilized spaces, such as permitting second or third-floor retail in converted office buildings.
  6. The ongoing supply-demand imbalance pushes retailers to adapt by exploring non-traditional formats. Flexibility is key—opting for a well-located 20,000-square-foot space can be smart, even if the standard prototype is 50,000 square feet.
  7. Various retailers, including international brands in apparel, food and beverage, and experiential sectors, are pursuing expansion. Gateway cities appeal to well-financed companies, while secondary markets like Nashville, Charleston, and Naples need more experienced brands.
  8. Untraditional retail centers, such as neighborhood shopping centers, are becoming attractive alternatives for brands traditionally based in malls or lifestyle centers. Downsized locations, like those being vacated by Walgreens, may also provide opportunities for grocers and other retailers.
  9. Retailers prioritize strategic growth by leveraging analytics and consulting services to navigate competitive space constraints and expansion challenges. Advisory support is critical for making informed decisions on where and how to grow.
  10. The retail market remains favorable, with opportunities to address unmet demand and tenant disruptions while emphasizing a localized approach that aligns retail centers with community needs and adapts to demographic and technological changes.